Airport System Development

August 1984

NTIS order #PB85-127793

AIRPORT SYSTEM DEVELOPMENT

ARCHIVES COPY l~ DO NOT REMOVE -- .~ • ..Q;;

FROM LIBRARY

Recommended Citation:Airport System Development (Washington, D. C.: U.S. Congress, Office of Technology

Assessment, OTA-STI-231, August 1984).

Library of Congress Catalog Card Number 84-601101

For sale by the Superintendent of DocumentsU.S. Government Printing Office, Washington, D.C. 20402

Foreword

The United States has the largest and most technologically advanced system of air-ports in the world. These airports support an air transportation network that links allparts of the Nation to the rest of the world and enables over 300 million passengerseach year to undertake journeys—many of great length—with ease, comfort, and safety.One measure of the excellence of this system is that over 98 percent of all airline flightsarrive within 15 minutes of schedule.

Still, there is cause for concern about the future adequacy of the airport system.On one hand, there is need to accommodate expected growth in air travel demand atmajor airports, several of which are now experiencing severe congestion at periods ofpeak use. On the other, there is also need to assure access to airport facilities by privateand business aircraft operators, who are fast becoming the predominant users of air-ports and the most active sector of civil aviation. Community concern about noise andland use limit the ability of airport planners and managers to provide additional facili-ties or, in some cases, to accommodate more traffic at existing facilities.

Undertaken at the request of the House Committee on Public Works and Trans-portation, this study examines present conditions and future needs of the Nation’s air-ports, with emphasis on possible solutions to problems of operational capacity and airtravel delay. The range of remedial actions considered includes improved airport andair traffic control technology, revised procedures for airport and airspace use, economicand regulatory measures to reduce demand during peak periods, and managerial ap-proaches to make more efficient use of existing airport facilities. Special attention isgiven to issues of airport planning and funding methods at Federal, State, and local levels.

OTA was assisted in this assessment by an advisory panel reflecting a broad rangeof interests and expertise, ably chaired by Dr. Don E. Kash of the University of Okla-homa. OTA is greatly indebted to the advisory panel and to many others in the avia-tion community for their generous contributions. Their participation does not neces-sarily constitute consensus or endorsement of the content of the report, for which OTAbears sole responsibility.

One notable feature of this assessment is that it is a cooperative effort by the Of-fice of Technology Assessment and the Congressional Budget Office, in which CBOprovided detailed analysis of airport financial management, funding methods, and capitalinvestment.

Director

. . .Ill

OTA Airport System Development Advisory Panel

Director,Don E. Kash, Chairman

Science and Public Policy ProgramUniversity of Oklahoma

James H. AndersonDirector, Office Building DivisionGeneral Services DepartmentI.E. Dupont DeNemours

Joseph BlattConsultant

Clifford W. CarpenterManager, Airport DevelopmentBoeing Commercial Aircraft Company

Pierre ChampagneDirector of Airport PlanningTransport Canada

H. McKinley ConwayPresidentConway Publications

Charilyn CowanStaff Director, Committee on Transportation,

Commerce and TechnologyNational Governors’ Association

Thomas J. DeaneVice President, Operating FacilitiesAvis Rent-A-Car, Inc.

John W. DrakeProfessorPurdue University

William GarrisonProfessorUniversity of California, Berkeley

Aaron GellmanPresidentGellman Research

John GloverSupervisor, Transportation PlanningPort of Oakland

Leonard GriggsAirport DirectorLambert St. Louis International Airport

Richard L. HarrisVice President, Public FinanceFirst Boston Corporation

John Hoyt*Principal Project ManagerRalph M. Parsons Company

Jack R. Hunt**PresidentEmbry-Riddle Aeronautical University

Richard JudyDirector of AviationDade County, Florida

Alfred KahnProfessorCornell University

Leonard MartinVice President, Passenger ServicesPiedmont Airlines

Dorn McGrathProfessor, Department of Urban and Regional

PlanningGeorge Washington University

Sonny NajeraDirector, Division of AeronauticsState of Arizona

Edmund Nelle, Jr.PresidentButler Aviation International

Jan RoskamAckers Distinguished Professor of Aerospace

EngineeringUniversity of Kansas

William SupakAviation DirectorPort of Portland

William WilsonVice President, Properties and FacilitiesFederal Express Corporation

● Replaced Forrest C. Six, Vice President, Ralph M. Parsons Co., who was transferred overseas.● *Deceased.

iv

OTA Airport System Development Assessment Staff

John Andelin, Assistant Director, OTAScience, Information and Natural Resources Division

William F. Mills* and Nancy Carson Naismith, ** Program ManagerScience, Transportation and Innovation Program

Larry L. Jenney, Project Director

M. Karen Gamble, Analyst

Jameson R. Miller, Research Assistant

Marsha Fenn, Administrative Assistant

R. Bryan Harrison, Office Automation Systems Analyst

Betty Jo Tatum, Secretary

Consultants

David W. Bluestone

Jonathan L. Gifford

Richard P. Krinsky

Peter Schauffler

Jac D. Watson

Contractors

C. A. C. I., Inc.–FederalGilbert Murray and Jac D. Watson

Landrum & BrownMark D. Conway and Stuart S. Holder

Simat, Helliesen & Eichner, Inc.Lois Kramer and William C. Spaeth

Congressional Budget Office

This assessment is a cooperative effort by the Office of Technology Assessment and theCongressional Budget Office. CBO’S work, which forms an integral part of this study has alsobeen published by them in Financing U.S. Airports in the 1980s, April 1984. OTA is particular-ly indebted to David Lewis, Richard R. Mudge, and Suzanne Schneider of CBO for their partic-ipation in this assessment.

‘Through September ]983* ‘After September 1983

Acknowledgements

During this assessment, OTA consulted with Federal, State, and local airport officials and many others inthe aviation community. We appreciate their advice and comment, which broadened

and strengthened our thinking on airport issues.

Gary AdamsArizona Department of Transportation

Bonnie AllinTucson Airport Authority

John AuerNebraska Department of Aeronautics

Johannes G. AugustinusPort Authority of New York and New Jersey

H. A. Bertholf, Jr.Phoenix, Sky Harbor

Walter BurgTucson Airport Authority

Glenn CateScottsdale Municipal Airport

Richard J. CirreKentucky Department of Transportation

Kim ClemansCalifornia Department of Transportation

John J. CorbettAirport Operators Council International

William Cousins IIIGeorgia Department of Transportation

Norman CrabtreeOhio Department of Transportation

Robert M. CusumanoCity of Chicago, Division of Aviation

George F. DoughtyCleveland Hopkins International Airport

Ed DunnPhoenix, Sky Harbor

George H. EdmondsonTruckee Tahoe Airport District

Arnold D. FeenerSan Francisco International Airport

Sheldon R. FeinSan Francisco International Airport

Lawrence GoldmanSouthern California Association of Governments

J. L. GrahamCity of Los Angeles, Department of Airports

Ronald GreerOmaha Airport Authority

George GundersenWisconsin Department of Transportation

Dan G. HaneyPeat, Marwick, Mitchell & Co.

Robert F. HolscherGreater Cincinnati Airport

Al HooverIowa Department of Transportation

Shelton JacksonU.S. Department of Transportation

Carl JohnsonFederal Aviation AdministrationGreat Lakes Region

Thomas KapsalisCity of Chicago, Division of Aviation

Henry A. KazimierIndiana Department of Transportation

Richard B. KeinzMinnesota Department of Transportation

Laurence J. KiernanFederal Aviation Administration

James D. KitchelPhoenix, Sky Harbor

Harold R. LagasseStellar Executive Air Services

F, G. LemkeCalifornia Department of Transportation

Joseph G. MasonNational Association of State Aviation Officials

H. C. McClureFederal Aviation AdministrationWestern-Pacific Region

Burdsall D. MillerCalifornia Department of Transportation

Mark F. MispagelCalifornia Department of Transportation

Owen MiyamotoHawaii Department of Transportation

vi

Robert MonroeAircraft Owners and Pilots Association

Clifton A. MooreCity of Los Angeles, Department of Airports

James V. MottleyFederal Aviation Administration

Byron OsterlohPhoenix, Sky Harbor

Willard G. Plentl, Sr.Department of AviationCommonwealth of Virginia

Willard G. Plentl, Jr.North Carolina Department of Transportation

Siegbert B. PoritzkyFederal Aviation Administration

J. Donald ReillyAirport Operators Council Internat

Allan Samuels

ona

Arizona Department of Transportation

Roy SamuelsSan Francisco International Airport

Spyridon N. SiderisCalifornia Department

Fred StewartCalifornia Department

Henry M. Streb

of Transportation

of Transportation

Merrill C. Meigs Airport, Chicago

Jack L. TippieLos Angeles County, Airports Division

T. James TrubyMaryland State Aviation Administration

Earl TuckerCalifornia Department of Transportation

Vincent VolpicelliPort Authority of New York and New Jersey

George H. WatsonOakland International Airport

Clay A. WilkinsTexas Aeronautics Commission

James R. WoodDayton International Airport

vii

Contents

Chapter Page

I. The Airport System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2. organizations and Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

3. The Problem of Capacity and Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

4. Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

5. Other Approaches to Reducing Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

6. Airport Financial Management and Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

7. Airport Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

8. Forecasting and Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

9. Airport System Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

10, Policy Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

Appendix Page

A. Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235

B. Survey of Current Airport Financial Management Practices . . . . . . . . . . . . . . . 237

C. Impact of Management Approach and Airport Size on AirportFinancial Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247

D. Factors Affecting Airport Costs of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

E. Airports in the Municipal Bond Market: A Regional Analysis . . . . . . . . . . . . . 250

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

ix

[Page omitted—scanned version almost entirely black]

Chapter 1

THE AIRPORT SYSTEM

Contents

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Primary Airports. . . . . . . . . . . . . . . . . . . . . . . . . . . .Commercial Service Airports . . . . . . . . . . . . . . . . .General Aviation Airports . . . . . . . . . . . . . . . . . . .Reliever Airports. . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Airport Capacity Problem . . . . . . . . . . . . . . . . .

Origin of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . .

Areas of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issues and Factors in Airport System DevelopmentFederal Policy and Strategy . . . . . . . . . . . . . . . . . .Funding Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Airport Management Issues . . . . . . . . . . . . . . . . . .Noise and Environmental Issues . . . . . . . . . . . . . . .Planning Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

List of Tables

Table

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121213151618

l. U.S. AirPort and Air Transportation Activity, 1982 . . . . . . . . . . . . . . . . . . . . . . 3Z. Federal-Aid Airports by Se&ice Level .. ...:...3. FAA Classification of Air Traffic Hubs . . . . . . . .4. The 10 Most Active General Aviation Airports .S. Airports Forecasted to Have Airside Congestion

List of Figures

Figure

l. Distribution of Passenger Enplanements byHub2. Profile of General Aviation Fleet, 1982 . . . . . . . .

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Size, 1982 . . . . . . . . . . . . . . . . 5. . . . . . . . . . . . . . . . . . . . . . . . . . 6

Chapter 1

THE AIRPORT SYSTEM

INTRODUCTION

The system of airports in the United States isthe largest and most complex in the world. As ofthe end of 1982, there were 15,831 airports on rec-ord with the Federal Aviation Administration(FAA) -4,805 publicly owned airports, 1,970 pri-vately owned fields open to public use, and 9,056reserved for private use only. This constitutesalmost half of the world’s total. These airportsrange in size from small unpaved strips used bya handful of private flyers to gigantic air trans-portation hubs such as Chicago O’Hare and At-lanta Hartsfield, each handling more than 500,000operations (takeoffs and landings) per year.

The number of airports alone, however, doesnot adequately reflect the extent and volume ofaviation activity in this country in comparisonwith other parts of the world. The United Stateshas half of the world’s airports, but two-thirdsof the world’s 400 busiest airports (in terms ofpassenger enplanements). Collectively, U.S. air-ports handled over 309 million passenger enplane-ments (domestic and international) and 3.6 mil-lion tons of mail and cargo in 1982—over three-quarters of the world totals, outside the Sovietbloc. ’ Table 1 presents additional data on the sizeof the U.S. airport and air transportation system.

Because of the sheer number of airports and thevariety of size and function, the term “airport sys-tem” has little meaning when applied to all theairports and landing fields in the United States asa whole. Many —in fact, most—of these airportsexist only for the convenience of a few aircraftowners and operators and play no substantial partin public air transportation. For this reason, FAAhas identified a smaller group of airports thatserve public air transportation either directly orindirectly and can be deemed of national impor-tance and eligible for Federal aid.

— . -—

‘Airport Operators Council International, Worldwide AirportTraffic Report, Calendar Year 1982 (Washington, DC: AOC1, May1983).

Since 1970, FAA has published a list of suchairports, classified by size and function, in a plan-ning document known as the National AirportSystem Plan (NASP). Under the Airport and Air-

Table 1 .—U.S. Airport and Air TransportationActivity, 1982

Aircraft facilities:a

Airports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Heliports ... , . . . . . . . . . . . . . . . . . . . . . . . . . . . . .STOLports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Seaplane bases . . . . . . . . . . . . . . . . . . . . . . . . . . .

Airport ownership and use:a

Publicly owned . . . . . . . . . . . . . . . . . . . . . . . . . . . .Private, open to public . . . . . . . . . . . . . . . . . . . . .Private . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Domestic passenger enplanements (millions):Air carrier:

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . .International . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commuter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Domestic revenue passenger miles (billions):Air carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commuter. ., . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Civil aircraft fleet:Air carrierb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .General aviation . . . . . . . . . . . . . . . . . . . . . . . . . .

Aircraft operations (millions):Air carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commuter and air taxi . . . . . . . . . . . . . . . . . . . .General aviation . . . . . . . . . . . . . . . . . . . . . . . . .Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hours flown (millions):Air carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commuter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .General aviation . . . . . . . . . . . . . . . . . . . . . . . . .

Air cargo (million tons):c

Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Freight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,5962,712

65458

15,831

4,8051,9709,056

15,831

272.819.717.1

309.6

207.82.3

210.1

4,074209,799213,873

9.15.1

34.12.3

50.6

6.71.7

36.444.8

1.22.43.6

3

# ● Airport System Development— - — — .

way Improvement Act of 1982 (Public Law 97-248), FAA was charged with preparing a new ver-sion of this plan, to be called the National Planof Integrated Airport Systems (NPIAS), which isscheduled for issue in September 1984. As partof this planning effort, FAA has recently revisedthe method of classifying airports and now liststhem in four major categories:2

1,

2.

3.

4.

Primary. -Public-use commercial serviceairports enplaning at least 0.01 percent ofall passengers enplaned annually at U.S.airports.3

Commercial service. —Other public-use air-ports receiving scheduled passenger serviceand enplaning at least 2,500 passengers an-nually.General aviation. —Those airports withfewer than 2,500 annual enplaned passen-gers and those used exclusively by privateand business aircraft not providing com-mon-carrier passenger service.Reliever.—A subset of general aviation air-ports, which have the function of relievingcongestion at primary commercial serviceairports and providing more access for gen-eral aviation to the overall community.

Table 2 lists the number of airports in each cat-egory as of the beginning of 1984 and those pro-jected for inclusion in the NPIAS in 1994.4

Primary Airports

This category of airports, comprising 281 loca-tions or less than 2 percent of all airports in theUnited States, handles virtually all of the airlinepassengers. Even within this small group, how-ever, the range of airport size and activity levelis very wide, and the distribution of passenger

Table 2.— Federal-Aid Airports by Service Level

Existing a Projected b

Service level (1984) (1994)

Primary . . . . . . . . . . . . . . . . . . . . . . . 281 284Commercial service. . . . . . . . . . . . . 279 346General aviation . . . . . . . . . . . . . . . . 2,424 2,723Reliever . . . . . . . . . . . . . . . . . . . . . . . 219 286

Total . . . . . . . . . . . . . . . . . . . . . . . . 3,203 3,639

enplanements is highly skewed. About half of theprimary airports (130) handle very little traffic,and collectively they account for only 3 percentof annual enplanements. At the larger primary air-ports, which handle the preponderance of passen-gers, there is a pattern of progressively higher con-centration of traffic at fewer and fewer airports.For instance, the top 24 airports account foralmost two-thirds of all enplanements, and the top10 account for 40 percent. Perhaps the most tell-ing fact is that one-quarter of all airline passengersboard their flights at one of just five airports(Atlanta Hartsfield, Chicago O’Hare, New YorkKennedy, Los Angeles, and Dallas-Fort Worth).5

Because several metropolitan areas are servedby more than one primary airport, FAA meas-ures aviation traffic by standard metropolitan sta-tistical area (SMSA) as well as by individual air-port. These metropolitan areas, called hubs byFAA, are divided into four classes according topercentage of total passenger enplanements: large,medium, small, and nonhub (table 3).

As with individual airports, the distribution ofpassenger enplanements is highly concentrated ina relatively few air traffic hubs. Figure 1 shows,for example, that 24 large hubs handle 70 percentof all traffic and, of these, the top 10 handlealmost half.

Commercial Service Airports

Excluding primary airports, the remaining com-mercial service airports are typically small and lo-cated in communities with a population of under

5Statistical Handbook of Aviation, Calendar Year 1982(Washington, DC: Federal Aviation Administration, December1982).

Ch. l—The Airport System ● 5

Table 3.-FAA Classification of Air Traffic Hubs

Hub Percent of total Number of hubsclassification enplaned passengers (1981)

Large . . . . . . . . 1,00 or more 24Medium . . . . . . 0.25 to 0.99 39Small . . . . . . . . 0.05 to 0.24 61Nonhub . . . . . . less than 0.05 425a

SOURCE: Statistical Handbook of Aviation, Calendar Year 1982 (lVashington, DCFederal Aviation Administration, December 1982).

the activity at these airports is general aviation(GA), privately owned aircraft used for businessand personal flying. The major concern of airportsin this category is not adequate capacity but keep-ing the airport in operation so as to provide essen-tial air service for the community and a base forgeneral aviation.

General Aviation Airports

100,000. They handle a low volume of passenger Over 90 percent of the airports available to thetraffic, 2,500 to 5,000 enplanements per year. public are used exclusively by GA aircraft. Gen-Service is usually provided by commuter airlines, eral aviation is a broad and disparate categoryoffering a few flights per day to nearby major that includes aircraft used for business purposes,hubs, and by air taxi operators. A large share of various types of aerial work, and flight instruc-

Figure l.— Distribution of Passenger Enplanements by Hub Size, 1982

All other commercial service

/ ’(415 apts.)

30/0

SOURCE: FAA Statistical Handbook of Aviation, Calendar Year 1982

6 ● Airport System Development— —.

tion, as well as those used for purely personal andrecreational purposes (see fig. 2). The types ofaircraft operated cover a wide spectrum: smallpiston-engine aircraft, advanced turboprops andturbojets, rotorcraft, gliders, balloons, and diri-gibles.

The airports serving general aviation are like-wise varied. Typically, they are small, usuallywith a single runway and only minimal naviga-tion aids. They serve primarily as a base for a fewaircraft. There are notable exceptions, however.A few GA airports located in major metropolitanareas handle extremely high volumes of traffic(particularly business and executive aircraft) andare busier and more congested than all but thelargest commercial airports. Table 4 lists the Na-tion’s 10 busiest general aviation airports.

For comparison, the busiest GA airport, VanNuys, CA, handled about 7 percent more opera-tions in 1982 than Los Angeles International, thethird-ranking air carrier airport in the UnitedStates (509,758 v. 478,892). Melbourne, FL, the10th-ranking GA airport, had 229,138 opera-tions—only slightly fewer than Boston Logan(244,748), the 10th-ranking air carrier airport. Asadditional perspective, the 301,363 annual oper-ations at Tamiami Airport in Florida, the sixth-ranking GA airport, are equivalent to about sotakeoffs or landings per hour (assuming the air-port is open 16 hours per day), which is aboutthe same as Washington National.

An important aspect of general aviation air-ports is that they serve many functions for a widevariety of aircraft. Some GA airports provideisolated communities with valuable links to otherpopulation centers. This is particularly true inareas of northern Alaska where communities areoften unreachable except by air, but many partsof the Western United States also depend heavilyon air transportation. In such areas, the GA air-port is sometimes the only means of supplyingcommunities with necessities and is vitally impor-tant in emergency situations.

The principal function of general aviation air-ports, however, is to provide facilities for pri-vately owned aircraft used for business and per-sonal activities. The role of GA airports inproviding facilities for business aircraft is of grow-

Figure 2.- Profile of General Aviation Fleet, 1982Primary use Other

2?40

Hours flownOther

SOURCE: FAA Statistical Handbook of Aviation, Calendar Year 1982.

ing importance. The business aircraft fleet islargely made up of twin-engine propeller or jetaircraft, typically equipped with sophisticatedavionic devices comparable to those of commer-

Ch. l—The Airport System . 7

Table 4.—The 10 Most Active General AviationAirports a

Airport Annual operations

1. Van Nuys, CA . . . . . . . . . . . . . . . . .2. Long Beach, CA . . . . . . . . . . . . . . .3. Santa Ana, CA . . . . . . . . . . . . . . . . .4. Seattle-Boeing Field, WA. . . . . . . .5. Oakland, CAb . . . . . . . . . . . . . . . . . .6. Tamiami, FL . . . . . . . . . . . . . . . . . . .7. Opa Locka, FL . . . . . . . . . . . . . . . . .8. San Jose, CAb . . . . . . . . . . . . . . . . .9. Pontiac, MI . . . . . . . . . . . . . . . . . . . .

10. Melbourne, FLb . . . . . . . . . . . . . . . .

590,758461,287396,029362,524334,557301,363295,215264,936238,532229,138

cial airliners. General aviation airports servingbusiness aviation play an important role by pro-viding facilities comparable to those at major aircarrier airports, thereby permitting diversion ofsome GA traffic from congested hubs.

Reliever Airports

Reliever airports are a special category of gen-eral aviation airports. They are located in thevicinity of major air carrier airports and are spe-cifically designated by FAA as “general aviationtype airports which provide relief to congested

major airports. ” To be classified by FAA as a re-liever, an airport must handle 25,000 itinerantoperations or 35,000 local operations annually,either at present or within the last 2 years. b Thereliever airport must also be located in an SMSAwith a population of at least 500,000 or wherepassenger enplanements reach at least 250,000 an-nually. As the name suggests, reliever airports areintended to draw traffic away from crowded aircarrier airports by providing facilities of similarquality and convenience to those available at aircarrier airports.

In recent years, FAA and Congress have en-couraged development of reliever airports as ameans of reducing delays at the larger hub air-ports. This is reflected in the Airport and AirwayImprovement Act of 1982 (Public Law 97-248),which specifies that 10 percent of airport aid fundsbe used for development of reliever airports.

bLocal operations are aircraft flights that originate and terminateat the same airport. An itinerant operation originates at one air-port and terminates at another.

Photo credit” Federal Aviation Administration

Reliever airport for general aviation

25-420 0 - 84 - 2

8 Airport System Development— — —

THE AIRPORT CAPACITY PROBLEM

The term “capacity” refers to the overall abilityof an airport to accommodate demand for serv-ice. Often, this is expressed as the number of air-craft operations (takeoffs and landings) that canbe handled on an hourly, daily, or annual basis.In the broadest sense, however, aircraft operationsare not the only aspect of demand that must beconsidered. This ability of the terminal buildingto handle passenger flow and the volume of vehic-ular traffic that can be accommodated on airportcirculation and access roads are also important.For aircraft operations, this rate of service is deter-mined by several factors—chiefly the layout ofrunways, taxiways, and aprons, the paths throughthe airspace leading to and from the airport, therules and procedures for controlling air traffic, theconditions of wind and weather, and the mix ofaircraft using the airport. Within the terminalbuilding and on the landside approaches to theairport, the service rate (throughput) is similarlyaffected by the basic design of facilities and by

the characteristics of passenger traffic (ratio oforigin-destination passengers to transfers, modeof surface access, etc.). Restrictions of vehiclemovement on access roads and at the curbside andbottlenecks at ticket counters, check-in points,baggage handling facilities, and gates all createpassenger delay and impinge on the efficiency ofairport operation. Since all of these factors varyover time at a given airport, capacity is not asingle, fixed amount but an average figure thatrepresents the typical rate at which demand canbe accommodated.

Since demand for airport service is not uniformand constant but highly variable from time to timeand place to place, the root of the airport capacityproblem is how to handle fluctuations in demandwithout unacceptable delay. This is not a generalsystemwide problem, it occurs at only a few air-ports at periods of peak demand. Most airports,including many large and busy airports in major

Photo credit’ US. Department of Transportation

Airside and landside

Ch. l—The Airport System . 9

metropolitan areas, have the capacity to handlepresent demand and projected growth for manyyears to come. Nor is the lack of capacity neces-sarily related to the size of the airport or the abso-lute volume of traffic. Some of the airports ex-periencing congestion and delay (or expected toin the future) are rather small, but they have hightraffic density at certain times.

In general, however, delay tends to occur atthose few airports serving the majority of airlinepassengers and so inconveniences a large numberof travelers. Further, delay has a ripple effectthroughout the system. Congestion at a few hubairports causes delay in connecting flights to andfrom other airports and, in the extreme, can af-fect the air traffic of a major region or the entirecountry.

FAA estimates that 14 airports (10 commercialand 4 general aviation) now experience significantproblems of capacity and delay. If demand growsas FAA projects and if no remedial action is taken,the number of airports affected might reach 61commercial airports—almost all large and manymedium hubs—and 44 general aviation airportsby the end of the century (see table 5).

The consequences of such congestion could besevere. Recent FAA estimates have placed the costof delay for airlines in 1980 at $1.0 billion to $1.4billion in extra crew time and wasted fuel, pri-marily the latter. This also represents an aggregateloss of 60 million hours of time for airline pas-sengers. 7 8 9 If FAA’s growth projections are real-ized, the delay costs to airlines could reach $2.7billion by 1991 and perhaps twice that figure by2000.

A number of alternatives have been suggestedto alleviate airport capacity problems and to re-duce delay. Very few of these solutions, however,are universally applicable, and none is a pana-cea. These alternatives can be divided into fourcategories. The first is to build new airports, al-though it is widely recognized that finding suitablelarge tracts of land and developing them as air-port sites are becoming increasingly difficult. FAAhas speculated that no more than one or two ma-jor air carrier airports will be built in the next dec-ade. 10 A second alternative is to expand existingairport facilities. This has been done at severalairports, but growing community resistance, par-ticularly because of noise, may make expansionmore difficult in the future. Application of newtechnology, however, has led to quieter aircraftthat may make airport expansion less objection-able to those concerned about noise.

A third alternative is to make more efficient useof existing airport capacity. This includes im-provements in technologies that would facilitatethe movement of aircraft, both in the air and onthe ground, and procedural changes such as re-ducing the longitudinal spacing between aircrafton final approach. A fourth alternative is to man-age airport demand so that aircraft activity ismore evenly distributed by time of day andamong airports. The two most commonly men-tioned demand-management techniques are eco-nomic measures, such as marginal-cost pricing,and regulatory actions, such as slot restrictions.

Because of the difficulties in building or expand-ing airports, there appears to be growing senti-ment that other solutions should be explored.FAA has suggested that the “high capital costs andlocal resistance to large-scale airport constructionin metropolitan areas-mandate that a critical needfor additional capacity be evident before new ma-jor airport proposals are advanced.’”]

10 ● Airport System Development— — . . — . . — -.—....——-—————— — . — — — . ---——-———. -..———— —— —

Table 5.—Airports Forecasted to Have Airside Congestiona

Commercial service

1981Chicago O’Hare (IL)Denver Stapleton (CO)Detroit Metro (Ml)Los Angeles International (CA)Philadelphia International (PA)San Francisco International (CA)St. Louis Lambert (MO)Washington National (DC)

By 1985Long Beach Dougherty (CA)Santa Ana John Wayne (CA)Palm Beach International (FL)

By 1990Anchorage International (AK)Atlanta Hartsfield (GA)Baltimore-Washington International (MD)Birmingham Municipal (AL)Boston Logan (MA)Dallas-Fort Worth (TX)Houston Hobby (TX)Houston Intercontinental (TX)Las Vegas McCarran (NV)New York Kennedy (NY)New York La Guardia (NY)Prescott Municipal (AZ)Raleigh-Durham (NC)

By 2000Burbank Glendale Pasadena (CA)

General aviation

1981Fort Worth Meachum (TX)Teterboro (NJ)Van Nuys (CA)

By 1985Baltimore Glenn L. Martin (MD)Farmingdale Republic (NY)Kansas City Downtown (MO)Scottsdale Municipal (AZ)

By 1990Anchorage Lake Hood (AK)Everett Snohomish County (WA)Houston Lakeside (TX)Killeen Municipal (TX)Manassas Municipal (VA)Mesa Falon (AZ)Morristown Municipal (NJ)Novato Gnoss (CA)Torrance Municipal (CA)Vero Beach Municipal (FL)

By 2000Anchorage Merrill (AK)Aurora State (OR)Beverly Municipal (MA)Carlsbad Palomar (CA)Chicago Palwaukee (IL)Dallas Addison (TX)Denver Arapahoe CountyEl Monte (CA)

(co)

Ch. I—The Airport System . 11— — — — — . —

ORIGIN OF

Concern about the future adequacy of the air-port system and possible strategies that might beadopted to deal with capacity and delay problemsled the House Public Works and TransportationCommittee to request that OTA assess future air-port capacity and its implications in terms of pub-lic policy. The committee asked that four majorsubjects be examined in the study:

1,

2.

the present and future extent of airportcapacity problems, their causes, and geo-graphic distribution;the extent to which these capacity problemswill act as a critical constraint on aviationdemand and the impact the capacity prob-lems could have on the various aviation usergroups, related industries, and localeconomies;

THE

3.

4.

STUDY

prospective technological solutions to air-port capacity problems, including analysisof the extent to which future capacity prob-lems are solvable by application of ad-vanced technologies; andpast and current financing mechanisms(local or State funding, bonding, Federalgrants, and various airport rents and userfees), the extent to which they have beenrelied on at various airport sizes and types,and the extent to which they can be de-pended on in the near future, including anal-ysis of the extent to which future capacityproblems are solvable by financial means.

This assessment addresses these questions bydescribing the existing state of the airport systemand outlining technological and economic meas-ures for dealing with airport capacity problems.

AREAS OF INTEREST

Various aviation organizations have called forincreased Federal effort to provide technologicalimprovements to increase capacity or to makemore effective use of existing capacity. Chiefamong these are wake vortex detection and avoid-ance systems, improved air traffic control, andadvanced landing systems. These groups have alsoadvocated procedural changes to make more ef-ficient use of airspace and runways, e.g., reducedlongitudinal separation on final approach andcloser lateral spacing for aircraft using parallelrunways. Finally, they seek added facilities atsome sites, notably separate runways for com-muter and general aviation aircraft. The Indus-try Task Force on Airport Capacity Improvementand Delay Reduction, for instance, recently rec-ommended accelerating the development and im-plementation of these and other technological andprocedural changes aimed at reducing delay. ’2FAA has been studying developments along sim-ilar lines for several years and is proceeding withselective implementation in the National Airspace

System Plan and the National Airspace Review.OTA has examined these technological measures,supplementing the Task Force Report and FAAstudies with independent analysis. This is reportedin chapter 4.

The question of funding is also crucial. Airportoperators, while they seek technological improve-ments, also maintain that the major benefit willcome from expansion of existing airports. The keyissues are the amount of capital required, thesources of funds, and the financing mechanisms.The airport financing question is of particular in-terest because of the effects of airline deregula-tion. In cooperation with the CongressionalBudget Office, OTA studied these questions,which are discussed in chapters 6 and 7.

The organizations and institutions concernedwith airport planning and operation play an im-portant role in how the system presently worksand in the ability to plan, fund, and implementneeded improvements. Roles and relationships arechanging because of deregulation, long-term struc-tural changes in the airline industry, Federal pol-icy toward airport aid, and public concern aboutairport noise and land use. Of particular impor-

12 . Airport System Development——.— — .

tance is whether airports will be able to controloperations and future development in a way thatoptimizes individual airports and yet assures com-patibility with overall system needs. Chapters 2and 5 address these matters.

Finally, there is the question of Federal policy.The Airport and Airway Improvement Act of1982 calls for a new approach to airport systemplanning, called the “National Plan of IntegratedAirport Systems.” The NPIAS is to be issued in

September 1984, and at present its scope anddirection are not entirely clear. OTA has exam-ined two aspects of the problem: 1) forecastingand its influence on determining airport needs,and 2) uncertainties that will affect the planningprocess. These subjects are treated in chapter 8.OTA has also considered features that could beincorporated in the NPIAS to make it an effec-tive planning document. Planning issues are dis-cussed in chapter 9.

ISSUES AND FACTORS IN AIRPORT SYSTEM DEVELOPMENT

Intertwined with these basic questions are issueswhere the interests of several parties have comeinto sharp conflict. One such group of issuesrelates to the strategic policy of the Federal Gov-ernment in development of the airport system.Some have suggested that past Federal policy hasplaced too much emphasis on capital investmentin new facilities and not enough on methods tomake more effective use of existing facilities. Asecond set of issues involves funding. Someobservers have suggested that the Federal role hasbecome too large and pervasive and that respon-sibility for airport development should devolveeither on the airports and their local sponsors oron State governments. Other issues arise from thelegal and contractual arrangements traditionallyconcluded between airports and airlines. Thesearrangements have evolved over several decades,during a period of extensive Federal regulation ofthe airlines. There is some concern that theseairport-airline agreements may be inappropriatein a deregulated era, either because they may betoo rigid to allow airports and airlines to meetnew challenges or because they may have anti-competitive features that do not allow the mar-ket to operate freely. Another issue is the prob-lem of aircraft noise, which has been a growingenvironmental and political problem for many air-ports despite technological advances in reducingnoise of jet aircraft. Finally, there are issues sur-rounding the planning of future airport develop-ment, particularly the timing and location ofdemand growth and the role that the Federal Gov-ernment will play in defining and meeting airportneeds.

Federal Policy and Strategy

Historically, Federal airport development pol-icy has sought to promote the aviation industryand to accommodate growth of traffic demand.Where forecasts of future traffic demand have ex-ceeded existing airport capacity, the solution hasgenerally been to provide capital aid to build newfacilities. The Airport Development Aid Program(ADAP), funded with user fees earmarked for theAirport and Airway Trust Fund, was establishedin 1970 as a response to the congestion and delayproblems that plagued airports in the late 1960s.ADAP provided Federal matching grants to air-ports to pay for certain types of capital improve-ments, principally construction of new runways,taxiways, and aprons to relieve airside congestion.Federal assistance for capital improvements con-tinues through the Airport Improvement Program(AIP), created by the Airport and Airway Im-provement Act of 1982.

FAA projections of future traffic demand in-dicate that there could be severe airside conges-tion at a number of major airports over the next20 years. Although some of the delays might beeased by improved air traffic control technology,the FAA view is that the primary constraint onthe growth of the system will be “a lack of con-crete” and that there is a need for more runways,taxiways, and ramps.

Thus, basic strategy has been challenged on thegrounds that it biases the outcome toward capital-intensive solutions, Critics argue that Federal de-velopment grants have, in some cases, encouraged

Ch. l—The Airport System 13

airport operators to overbuild. In other cases, thefacilities built with Federal support are substan-tially different in form and more expensive thanneeded to accomplish their intended function. Butmore fundamentally, the existence of a Federalprogram providing aid for only certain types ofcapital improvements at airports has distorted in-vestment decisions and led airport operators tobuild not necessarily what they need but what theGovernment is willing to help pay for. By accom-modating demand wherever and whenever it oc-curs through increasingly large and complex newcapital facilities, more growth is encouraged atprecisely those locations where it will be most dif-ficult and expensive to absorb.

Other critics have suggested that projections oftraffic growth are too high. Recent changes in theairline industry, such as deregulation, the growthof commuter air carriers, sharp rises in fuel costs,and escalating operating costs, may have causedpermanent structural changes in the airline indus-try such that the great traffic growth of the 1960sand 1970s will not continue. Thus, policies aimedat accommodating high projected levels of growthmay lead to overbuilding and excess capacity, andmisallocation of resources within the system.

Congestion and delay in the airport system arenot evenly distributed. They are concentrated ata few airports, while many others operate farbelow their design capacity. Thus, an alternativestrategic response might be to manage or directgrowth of air activity in ways that make moreproductive use of existing, uncrowded airport fa-cilities.

Some observers believe that growth can bemanaged through administrative or economicmeans requiring only limited new capital invest-ments. Administrative responses to growth in-clude rules adopted by airport operators or vari-ous levels of government to divert traffic fromcongested airports to places or times where it canbe handled more easily. Economic responses relyon market competition to determine access to air-port services and facilities. To some extent, bothadministrative and economic measures for man-aging demand are already in use at a number ofbusy airports. However, there are legal, contrac-tual, and even constitutional barriers that might

preclude wider use of such techniques. Some ofthese barriers could be lowered through FederalGovernment action. A discussion of possibleadministrative and economic options is presentedin chapter 5.

Funding Issues

Before World War II, the Federal Governmentwas inclined to the view that airports, like oceanand river ports, were a local responsibility, andthe Federal role was confined to maintaining thenavigable airways and waterways connectingthose ports. At the onset of World War II, theFederal Government began to develop airports onland leased from municipalities. Federal invest-ment was justified on the grounds that a strongsystem of airports was vital to national defense.After the war, many of these improved airportswere declared surplus and turned over to munici-palities. Federal assistance to airports continuedthroughout the 1950s and 1960s at a low level andwas aimed primarily at improving surplus airportsand adapting them to civil use. Major Federal sup-port of airport development resumed in 1970 withthe passage of the Airport and Airway Develop-ment Act, which was in large part a response tothe congestion and delay then being experiencedat major airports. This act established the user-supported Airport and Airway Trust Fund andADAP.

Federal assistance to airports under ADAP wasdistributed as matching grants for capital im-provement projects. There were several formulasfor allocation—entitlement (calculated from thenumber of passengers enplaned at the airport),block grant (based on State area and population),and need (discretionary funds). Over the 10-yearlife of ADAP, outlays from the Trust Fundamounted to approximately $4 billion. ADAP ex-pired in 1980, but a similar program of airportdevelopment assistance, AIP, was established in1982. Before AIP was enacted there was exten-sive debate about the future direction of Federalairport aid, sparked by proposals to withdrawassistance for (“to defederalize”) major air carrierairports.

Supporters of defederalization advanced twoarguments: that the Federal Government is overin-

14 ● Airport System Development

Photo credit’ Golden West

Commuter air service, a link to small communities

volved in financing airport development and thatFederal assistance is not necessary for large air-ports because they are capable of financing theirown capital development. By excluding large air-ports from eligibility for Federal grants, theGovernment could reduce the overall cost of theaid program and at the same time provide moreaid to small air carrier and general aviation air-ports. Under various proposals, the top 40 to 69airports (in terms of enplaned passengers) wouldhave lost eligibility for Federal aid. ’3 The advan-tage to large airports, as pointed out by supportersof defederalization, would be freedom from manylegal and administrative requirements involved inaccepting Federal assistance.

Opponents of defederalization contended thatthe proposal was unwise for several reasons. First,it would eliminate Federal assistance for the veryairports that provide the bulk of passenger serv-ice and have the greatest problems of congestionand delay. It is at these airports, the backboneof the national system, where a Federal presencecan most easily be justified. Further, passengersusing large airports pay about three-quarters ofthe taxes supporting the Airport and Airway TrustFund. Thus, defederalization would lead to sub-sidy of smaller airports by larger ones. Someobservers also questioned the ability of many air-ports to carry out necessary capital improvementswithout Federal participation. While agreeing thatFederal grants form only a small percentage oftotal capital budgets at large airports, they arguedthat it was a needed revenue source for all butthe very largest 5 or 10 airports.

Some proponents held that defederalized air-ports should be allowed to charge a “passengerfacility charge” or “head tax” to make up for theloss of Federal funds. Federal law now prohibits

Ch. l—The Airport System ● 1 5.

airports from taxing passengers. Others objectedto the head tax while supporting the concept ofdefederalization, holding that airports could raisesufficient funds through retained earnings orthrough the private bond market to cover theircapital needs. One major objection to the headtax was that passengers would have to bear a dou-ble tax when using a defederalized airport. Theywould have to pay both a ticket tax supportingthe Airport and Airway Trust Fund and a headtax at the arrival or departure airport.

The major airlines, as represented by the AirTransport Association, were indifferent on thequestion of defederalization but opposed to thehead tax. They held that the tax would imposeunnecessary administrative burdens on them andwould be unfair to passengers. Other observersnoted that the underlying reason for the air car-riers’ objection was that head taxes would giveairports an independent source of revenue andweaken the voice that airlines now have in air-port investment decisions.

Airport operators were divided. Some verylarge airports, such as Chicago O’Hare, supporteddefederalization on the condition that it be accom-panied by the freedom to impose a head tax. TheAirport Operators Council International, an orga-nization representing airports of all sizes, ex-pressed qualified support of the concept of “op-tional defederalization” where airports couldchoose whether or not they wished to receive Fed-eral aid, rather than having the decision made forthem on the basis of size and passenger volume.Many airports opposed both defederalization andthe head tax.

The question of defederalization is still open.Although the Airport and Airway ImprovementAct of 1982 passed without a defederalization pro-vision, it directed the Department of Transpor-tation to study the effects of defederalization andto prepare a report to Congress.

Another approach to airport financing was alsoraised during the debate over AIP, although it wasnot introduced into legislation. Under the generalconcept of “new federalism, ” it was proposed toturn increased responsibility for decisions on air-port funding and programming over to State avia-tion agencies and departments of transportation.

Supporters contended that State agencies are ina better position to determine the needs of localairports and could distribute grants with less redtape than the Federal Government. They pointedout that some States already have active aviationagencies that evaluate airport improvement proj-ects and approve all applications for Federal assist-ance. In these cases, the needs of the airports andthe State might better be served by allowing Stateagencies more latitude in distributing airportgrants.

A stronger role for State agencies could reducethe Federal role to basically that of a tax collec-tor. Because of the interstate nature of air trans-portation, it would probably be more efficient tocontinue to collect ticket taxes, fuel taxes, or otheraviation taxes at the national level. However, thefunds could be passed through to the States ona formula basis, and the actual decisions on howfunds were spent could be made at the State level.

There were several objections to the conceptof new federalism. First, State agencies vary instrength. Many do not have the staff or the ex-pertise to take on the responsibilities of evaluatingairport development projects or administeringgrants. A period of transition would be necessarywhile these States prepared to accept new respon-sibilities. Others argued that setting up 50 sepa-rate agencies to do the work of FAA would addan additional layer of bureaucracy, since FAA in-volvement could not be completely eliminated.Still others saw interstate or multistate coopera-tion as a major stumbling block. For example, aState government, perhaps lacking perspective ofthe airport system as a whole, might find littleincentive to aid development of an airport out-side its borders or to enter into regional compactsto compensate citizens of adjacent States for air-port noise impacts.

The policy implications of the questions ofdefederalization and State administration are ex-amined further in chapter 10 of this report.

Airport Management Issues

Deregulation has led to changes in the relation-ship between airports and airlines. Airports tradi-tionally maintained long-term use agreements (of20 to 30 years) with the airlines that served them.

—

16 Airport System Development

These agreements covered such arrangements aslanding fees and the leasing of terminal space. Asa result of these agreements, airlines have had astrong influence on the creditworthiness of air-ports in the revenue bond market since their fi-nancial stability and continued presence was aguarantee of the long-term economic viability ofthe airport. In some instances, airlines have beenparty to airport revenue bonds, agreeing to bejointly and severally liable for payment of debtand interest. In return for such guarantees, air-lines have gained approval rights for capitalimprovement projects to be undertaken at theairport.

Since deregulation, however, air carriers’ routesand service points are not as stable, and the air-lines themselves have experienced financial dif-ficulties. Long-term contracts written in the eraof regulation may now inhibit the carriers’ free-dom to change routes. Conversely, they may alsomake it difficult for airports to accommodate newcarriers. In some cases, carriers with long-termagreements whose service to the airport has de-clined may be occupying gate and counter spacethat a new entrant might be able to use more ef-fectively.

Some observers have questioned whether long-term agreements, especially majority-in-interestclauses, may not have anticompetitive effects inthe deregulated environment. They point out thatincumbent carriers might make use of their agree-ments to deny new entrants access to the airport,or at least to place them at a competitive dis-advantage with respect to terminal space and fa-cilities. They also point out that carriers often ne-gotiate with airport management as a group ina “negotiating committee” or “top committee” andquestion whether group negotiations involvingcompeting firms are appropriate in a deregulatedmarket.

It has also been pointed out that a capacity limitat a major airport has the effect of reducing freecompetition among carriers and works as a formof “reregulation” of the industry. Airport opera-tors must be careful that actions taken to man-age or control the growth of traffic at individualairports do not have anticompetitive effects. Thisissue was raised in connection with two recent

events, the 1981 air traffic controllers’ strike andthe Braniff bankruptcy, which brought attentionto the question of who owns airport operating“slots. ”14

During the strike, FAA imposed quotas on 22airports, limiting the number of operations thatcould be performed each hour. Several methodsof allocation were tried—administrative assign-ment, exchanges among incumbent carriers, and,briefly, auction. New entrant airlines complainedthat all of these methods were unfair.

When Braniff stopped operating, FAA redis-tributed its slots among other carriers, despiteBraniff’s claims that the slots were the airline’sproperty for which it should be paid. Through-out this period there was controversy over whetheror not a slot should be considered property, andwhether the proceeds from a slot sale should goto the airline, the airport, or the Federal Govern-ment. This issue has arisen again in connectionwith proposed slot auctions at Washington Na-tional Airport.ls

This question may become particularly acuteif problems of delay and congestion spread tomore airports, and airport operators seek toemploy traffic management techniques. If an air-port imposes a quota, it must devise some methodfor allocating slots to present users and for ac-commodating new entrants. Until the question ofslot ownership is resolved, any attempt to use saleor auction as an allocation method is likely toreignite this controversy.

Noise and Environmental Issues

Noise has been a major problem at airportssince the introduction of the commercial jet air-craft. Recent technological advances in airframeand jet engine design have made new aircraftmuch quieter, but many industry experts believethat further large-scale reductions in aircraft noisewill not be possible.

The public is very sensitive to noise, which hasbecome an emotionally charged political issue.

14A slot is a block of time allocated to an airport user to Performan aircraft operation (takeoff or landing).

Aviation Week and Space Technology, Aug. 15, 1983, pp. 32-33.

Ch. l—The Airport System “ 17— —

Noise, an emotionally charged issue

Noise is probably the single most important con-straint on the expansion of airports or the build-ing of new ones. The problem is in large part oneof land use, and land use decisions are usuallybeyond the control of FAA and the airport pro-prietor. Zoning and land use planning are theresponsibility of local jurisdictions, and manyjurisdictions have not applied land use controlsto prevent residential communities from growingup near airports. Often, intergovernmental coop-eration is needed because major airports may besurrounded by several municipalities, each withdifferent zoning policies. The Federal Government

Photo credit” Los Angeles Times

complicated the issue by financ-has sometimes .ing and approving residential development proj-ects in high-noise areas.

At present, citizens with complaints about air-port noise have recourse only to the airport pro-prietor. While FAA and air carriers have someresponsibility for abating aircraft noise, only theairport operator is legally liable. In many cases,airports have had to pay nuisance and damageclaims for noise. To reduce their liability and toprotect themselves, airports have instituted noiseabatement programs that involve restricting air-

. Airport System Development

craft flight paths or hours of operation so as toreduce noise impact on residential areas. Noiseabatement procedures can have a detrimental ef-fect on airport capacity, and many airports withserious congestion and delay have found that theneed to control noise restricts their freedom of ac-tion. In some cases, airports have had to purchasesurrounding land or install noise-absorbing insula-tion in buildings under flight paths.

Some States and localities have enacted specialregulations to limit aircraft noise at airports undertheir jurisdiction. There are several concernsabout the proliferation of local noise standards.First, the standards vary from one location toanother, adding confusion and complexity to thesystem. Second, the standards may act as a re-straint on interstate commerce. Airlines may haveto accelerate their purchases of quiet aircraft inorder to serve many points with stringent noisestandards. If they are not financially able to makethese purchases, the only alternative may be tocurtail operations at some locations.

Some argue that the Federal Governmentshould set and enforce a uniform national stand-ard for airport noise. However, FAA has beenreluctant to embark on such a policy, in part be-cause the Federal Government might then haveto assume liability for violations of the standard.

Planning Issues

Many of the difficulties in planning a nationalairport system arise from its size and diversity.Each airport has unique problems, and each air-port operator—although constrained by laws, reg-ulations, and custom—is essentially an independ-ent decisionmaker. While airports collectivelyform a “system, “ it is not a system that is com-prehensively planned and centrally managed.FAA’s role in planning the system has traditionallybeen one of gathering and reporting informationon individual airport decisions and discouragingredundant development.

Since 1970, the National Airport System Planhas been prepared by FAA regional offices, work-ing in conjunction with local airport authorities.The NASP presents an inventory of the projectedcapital needs of almost 3,200 airports “in whichthere is a potential Federal interest and on which

Federal funds may be spent .“16 Because the fundsavailable from Federal and private local sourcesare sufficient to complete only a fraction of theeligible projects, many of the airport improve-ments included in the NASP are never undertaken.

The NASP has been criticized on three principalpoints. First, it is not really a plan, in the sensethat it does not present time phasing or assignpriorities to projects. FAA has attempted to meetthis criticism in the latest edition by categorizingprojects and needs according to three levels of pro-gram objectives: Level I—maintain the existingsystem, Level II—bring airports up to standards,and Level III—expand the system. Some, how-ever, see this categorization as inadequate.

Second, the criteria for the selection of the air-ports and projects to be included in the plan havecome under criticism. Some have argued that mostof the 3,200 airports in the NASP are not trulyof national interest and that criteria should bemade more stringent to reduce the number to amore manageable set. On the other hand, thereare those who contend that the plan cannot beof national scope unless it contains all publiclyowned airports. It is argued that, since the NASPlists only development projects eligible for Fed-eral aid and not those that would be financedsolely by State, local, and private sources, thetotal airport development needs are understatedby the plan.

A final criticism is that the NASP deals strictlywith the development needs of individual airports,without regard to regional and intermodal coordi-nation. This deficiency was addressed by Con-gress in the 1982 Airport and Airway Improve-ment Act, which directed FAA to develop a NationalPlan of Integrated Airport Systems. FAA hasbegun work on the plan, which is to be completedby September 1984. There is still uncertaintyabout the form that NPIAS will take and howmany airports will be included. Some approachesto developing an integrated national airport sys-tem plan are discussed in chapter 9.

Revised Stutistlcs, 1980-1989Administration, 1980), p. iii.

Chapter 2

ORGANIZATIONS ANDINSTITUTIONS

- - -

D

.

Photo credit Federal Aviation Adrnfrtfsfraftoi,1

—

Contents

Airport Ownership and Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Airport-Air Carrier Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Airport-Concessionaire Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Airport-General Aviation Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Planning and Development Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Airport Users.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .State Aviation Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Regional Planning Agencies . . . .Other Parties ..,......

Capital Improvement . . . .

Aircraft Noise . . . . . . . . . .Federal ResponsibilitiesMeasurement of Noise.Noise and Land Use. . .Local Noise Abatement

List of Tables

Table No.

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. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .Programs

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6.7.8.

Public Operation of Commercial Airports by Size, 1983.State Funding of Airport and Aviation Programs . . . . . . .Land Use Compatibility With Yearly Day-Night Average

List of Figures

Figure No,3. Effects of Curfewson Transcontinental

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Chapter 2

ORGANIZATIONS AND INSTITUTIONS

A major commercial airport is a huge publicenterprise. Some are literally cities in their ownright, with their own fire and police departments,road systems, powerplants, hotels, restaurants,and even factories, schools, and churches locatedon the property. Administration of these facilitiesis the responsibility of the airport operator, usu-ally a public entity such as a department of citygovernment or a special aviation or port author-ity. Airports, however, also have a private char-acter in that they must be operated in conjunc-tion with airlines that provide air transportationservice and with concessionaires and other firmsdoing business on airport property. This combina-tion of public management and private enterprisedistinguishes the operation of commercial airportsfrom that of wholly public or wholly private. . .——.——.—

‘Portions of this chapter are based on work performed by the Con-gressional Budget Office and published in financing U.S. Airportsin the 1980s, April 1984.

enterprises. In addition, operation of an airportentails interaction with several other parties: gen-eral aviation, the public at large, agencies of local,regional, and State government, the Federal Avia-tion Administration (FAA), and other agencies ofthe Federal Government. Each of these parties ap-proaches airport operation and development witha different set of concerns, responsibilities, andexpectations.

This chapter surveys common types of airportownership in the United States and reviews rela-tionships between the airport operator and air car-riers, general aviation, concessionaires, and otherairport users. The roles of airport users and Fed-eral, State, and regional agencies in airport plan-ning and development are also examined, withspecial emphasis on the intergovernmental and in-stitutional relations involved in building or ex-panding airports. The issue of aircraft noise andits effects on airport operation is also addressed.

AIRPORT OWNERSHIP AND OPERATION

Public airports in the United States are ownedand operated under a variety of organizationaland jurisdictional arrangements. Usually, owner-ship and operation coincide: commercial airportsmay be owned and run by a city, county, or State,by the Federal Government, or by more than onejurisdiction (e.g., a city and a county). In someinstances, however, a commercial airport is ownedby one or more of these governmental entities butoperated by a separate public body, such as anairport authority specifically created for the pur-pose of managing the airport. Regardless of own-ership, legal responsibility for day-to-day opera-tion and administration can be vested in any offive kinds of governmental or public entities:

● a municipal or county government,● a multipurpose port authority,● an airport authority,● a State government, or• the Federal Government.More than half of the Nation’s large and me-

dium commercial airports, and a greater percent-

age of small commercial airports, are operated bymunicipal or county governments (see table 6).A typical municipally operated airport is city-owned and run as a department of the city, withpolicy direction by the city council and, in somecases, by a separate airport commission or advi-sory board. County-run airports are similarlyorganized. Under this type of public operation,airport investment decisions are generally madein the broader context of city- or countywide pub-lic investment needs, budgetary constraints, anddevelopment goals. To raise investment capital,these airports usually rely on one of the two ma-jor forms of tax-exempt municipal bonding: gen-eral obligation bonds, which are backed by thefull faith, credit, and taxing power of the issuinggovernment; and revenue bonds, for which debtservice is paid entirely out of revenues generatedby the airport.z

‘These financing mechanisms are discussed further in ch. 7.

21

—

22 ● Airport System Development

Table 6.—Public Operation of Commercial Airports by Size, 1983

Large Medium Small a

Airport operator Number Percent Number Percent Number Percent

Municipality or county. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 58 23 49 NIA 61Port authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 21 6 13 N/A 3Airport authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 13 12 26 NIA 31State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .’. 1 4 5 11 NIA 5Federal Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4 1 2 NIA o

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 100 47 100 489 100

Some commercial airports in the United Statesarerun byport authorities—legally chartered in-stitutions with the status of public corporationsthat operate a variety of publicly owned facilities,such as harbors, airports, toll roads, and bridges.Multipurpose port authorities run about 21 per-cent of the large commercial airports and 13 per-cent of the medium-size airports. In managing theproperties under their jurisdiction, port authoritieshave extensive independence from State and localgovernments. Their financial independence restslargely on the power to issue their own debt, inthe form of revenue bonds, and on the breadthof their revenue bases, which may include fees andcharges from marine terminals and airports as wellas proceeds (e.g., bridge or tunnel tolls) fromother port authority properties. In addition, someport authorities have the power to tax within theport district, although it is rarely exercised.

About one-eighth of all large, and one-fourthof medium-size commercial airports are operatedby airport or aviation authorities. Similar in struc-ture and in legal charter to port authorities, thesesingle-purpose authorities also have considerableindependence from the State or local govern-ments, which often retain ownership of the air-port or airports operated by the authority. Likemultipurpose port authorities, airport authoritieshave the power to issue their own debt for financ-ing capital development, and in a few cases, thepower to tax. Compared to port authorities, how-ever, they must rely on a much narrower baseof revenues to run a financially self-sustainingenterprise.

State-run airports are typically managed by theState’s department of transportation. Either gen-

eral obligation or revenue bonding may be usedto raise investment capital, and State taxes onaviation fuel may be applied to capital improve-ment projects. Although several States run theirown commercial airports, only a handful of largeand medium-size commercial airports are oper-ated in this way—those in Alaska, Connecticut,Hawaii, and Maryland.

The Federal Government owns and operatestwo commercial airports serving the District ofColumbia and environs—Washington Nationaland Dunes International. FAA manages thesetwo facilities, with capital development financedthrough congressional appropriations and projectcosts recouped by airport landing fees and ter-minal charges. The Federal Government alsolevies user taxes and disburses funds for the cap-ital development of other airports through FAA’sAirport Improvement Program, as discussed laterin this chapter.

Publicly owned general aviation airports maybe owned by a municipality, county, or State, orthey may be the property of one or more of thesejurisdictions but run by a separate public bodyas part of a multiairport system. Over 40 percentof all general aviation airports open to the pub-lic are privately owned. Most publicly owned gen-eral aviation airports (219 FAA-designated re-lievers and 2,424 other genera] aviation airports)are managed either by public operators—munici-palities, counties, States, or independent author-ities—or by private operators who charge for theirservices and remit a portion of their revenues tothe airport owners. Reliever airports often are runas part of local or regional multiairport systems.

Ch. 2—Organizations and Institutions ● 2 3—

Airport-Air Carrier Relations

From the airlines’ perspective, each airport isa node in a route system, a point for the pickupand transfer of passengers and freight. In orderto operate efficiently, air carriers need certain fa-cilities at each airport. These requirements, how-ever, are not static; they change with traffic de-mand, economic conditions, and the competitiveclimate. Before airline deregulation in 1978, re-sponse to changes of this sort was slow and med-iated by the regulatory process. Carriers had toapply to the Civil Aeronautics Board (CAB) forpermission to add or to drop routes or to changefares. CAB deliberations involved published notices,comments from opposing parties, and sometimeshearings. Deliberations could take months, evenyears, and all members of the airline-airport com-munity were aware of a carrier’s intention to makea change long before the CAB gave permission.Since the Airline Deregulation Act of 1978, how-ever, air carriers can change their routes withoutpermission and on very short notice. With theseroute changes, airline requirements at airports canchange with equal rapidity.

In contrast to airlines, which operate over aroute system connecting many cities, airport oper-ators must focus on accommodating the interestsof a number of users at a single location. Changesin the way individual airlines operate may put

pressures on the airport’s resources, requiring ma-jor capital expenditures or making obsolete a fa-cility already constructed. Further, because air-ports are multimodal hubs, airport operators mustaccommodate many users and tenants other thanthe airlines and must be concerned with efficientuse of terminal and landside facilities that are oflittle concern to the carriers, even though carriers’activities can severely affect (or be affected by)them.

Despite their different perspectives, air carriersand the airport management have a common in-terest in making the airport a stable and successfuleconomic enterprise. Traditionally, airports andcarriers have formalized their relationship throughuse agreements that establish the conditions andmethods for setting fees and charges associatedwith use of the airport by air carriers. Most agree-ments also include formulas for adjusting thosefees from year to year. The terms of a use agree-ment can vary widely, from short-term monthlyor yearly arrangements to long-term leases of 25years or more. Within the context of these useagreements, carriers negotiate with the airport toget the specific airport resources they need forday-to-day operations. For example, under thebasic use agreement, the carrier may conduct sub-sidiary negotiations for the lease of terminal spacefor offices, passenger lounges, ticket counters, andother necessities.

Photo credit” Federal Aviation Adrninisfraf/on

Convergence and competition for airport access

25-420 0 - 84 - 3

24 ● Airport System Development—.

Long-term agreements between airports andmajor airlines have traditionally been the rule.One reason is the long-lived nature of the in-vestments involved. A runway may have an eco-nomic life of a decade or more, a terminal evenlonger. When an airport undertakes such an im-provement for the benefit of the airlines, the air-port may want long-term leases to help ensure thatcarriers will continue to use the facility and helppay for it. At some airports the use agreementsand leases may hold all signatory carriers jointlyand severally responsible for payments; at othersairlines may be individually responsible for im-provements made for their benefit.

As described in chapter 7, which deals with air-port financing, revenue bond buyers lend moneyto the airport to construct a facility, and the air-port authority applies the revenues from opera-tion of the facility to repaying the principal andinterest. To reduce the risk to bond buyers, andthus lower the interest rate, air carriers may agreeto guarantee the airport sufficient revenue to paythe debt. For example, the use agreement may givethe airport the right to charge landing fees to gen-erate sufficient funds to cover operating costs anddebt service.

In the past, investors perceived the major air-lines, who operated as virtual regulated monop-olies with clearly defined markets, as strongerfirms and better credit risks than individual air-ports. In recent years, the perception of airlinesas stable and the airports as risky has begun tochange. Since deregulation, airlines are no longerunder an obligation to serve a particular city, norare they protected from competition by other car-riers. They are free to compete, to change theirroutes, and to go out of business. On the otherhand, certain airports have demonstrated thatthey are creditworthy and have strong travel mar-kets. Regardless of what happens to an individualairline, these strong airports will continue to beserved. In these locations, long-term agreementswith individual carriers have become less impor-tant for airports seeking financing than the under-lying economic strength of the community.

Due to the frequent route changes since dereg-ulation, short-term use agreements and leases arebecoming more common. Although the cost to

the carrier of a short-term lease may be higher,it has the advantage of allowing greater flexibilityfor both the carrier and the airport. A carriertesting a new market may not be able or willingto enter a long-term agreement or to assumeresponsibility for capital improvements until it issure that the market will be profitable. At thesame time, an airport may not want to enter intoa long-term agreement with a new carrier that hasnot yet established a reputation for reliability. Atsome airports, several different kinds of use agree-ments may be in effect simultaneously.

In exchange for guaranteeing sufficient revenuesto service long-term debt, airlines have tradi-tionally assumed some control of, or at least ma-jor participation in, important decisions affect-ing airport operation and capital improvement,especially the latter. In many cases, airports arebound by “majority-in-interest” clauses in theirlease agreements whereby they are contractuallyrequired to consult with the carriers on major cap-ital improvements and must abide by decisionsof the majority of the carriers with whom theyhave long-term agreements. The recent report ofthe Airport Access Task Force, chaired by CABChairman Dan McKinnon, raised the question ofwhether majority-in-interest clauses are anticom-petitive since they might be used by incumbentcarriers to veto airport operator’s plans to buildfacilities for new entrants.3

As with major airport planning decisions, ne-gotiations related to the day-to-day needs of thecarriers have traditionally been carried out be-tween the airport management and a negotiatingcommittee, called a “top committee, ” made up ofrepresentatives of the scheduled airlines that aresignatories to use agreements with the airport.Top committees have been an effective means ofbringing the collective influence of the airlines tobear on airport management.

The nature of negotiations at some airports haschanged radically since deregulation. Under reg-

3“Report and Recommendations of the Airport Access Task Force, ”March 1983, p. 59. The Task Force was directed by Congress, inthe Airport and Airway Improvement Act of 1982, to take a com-prehensive look at airport access problems. Members includedleaders from all segments of the aviation industry.

Ch. 2—Organizations and Institutions 25

ulation, the major carriers-though competitors—had reasonably similar interests and needs. Theydid not really compete on the basis of price, andthe regulatory process guaranteed that no mem-ber of the community could surprise the otherswith sudden changes in operating strategy. Thecarriers’ representatives were a small group of peo-ple who sat on the same side of the negotiatingtable at many different airports. Carriers gener-ally worked with one another in an atmosphereof cooperation and presented a common positionin negotiating with the management of an in-dividual airport.

Since deregulation, however, the environmenthas been characterized by competition rather thancooperation. Carriers may radically alter theirroutes, service levels, or prices on very shortnotice. They are reluctant to share informationabout their plans for fear of giving an advantageto a competitor. These factors make group nego-tiations more difficult. Some airport proprietorshave complained that, in this competitive atmos-phere, carriers no longer give adequate advancewarning of changes that might directly affect theoperation of the airport. Nevertheless, negotiat-ing committees continue to operate, principallybecause it is essential that there be some mecha-nism for communication between air carriers andairport management. The CAB Task Force notedthat negotiating committees still exert great influ-ence on all aspects of airport operation.4

The days when most major airports are domi-nated by a few large airlines with long-term agree-ments may be passing away. One reason is theproliferation of air carriers since deregulation. Thewide variation in aircraft size and performance,number of passengers, and markets served meansthat different classes of carriers require somewhatdifferent facilities. Commuter carriers, with theirsmaller aircraft, usually do not need the same gateand apron facilities as major carriers. While therewere commuters before deregulation, they arecoming to constitute a larger fraction of users atmany airports. Other new entrants, including “nofrills” carriers, may also have different needs fromthose of conventional air carriers— for example,

41bid., p. 61.

they may want more frequent gate access, but lessbaggage handling. These minority carriers maycome to wield more power in negotiating with theairport for what they need and may challenge ma-jor carriers for a voice in investment decisions atan airport,

Not all aviation experts agree with this analy-sis, at least as an indication of long-term trends.They point out that half of the top 35 hub air-ports owe a majority of their traffic to no morethan two airlines—a near monopoly dominancethat is increasing since deregulation. This leadsthem to foresee that the ultimate effect of deregu-lation will be more, not less, concentration of theairline industry—major carriers and commutersalike, As the weaker competitors drop out or areabsorbed by the stronger, the remaining airlinesmay exercise even greater dominance of certainlarge or medium-size airports that serve as homebase or principal hubs.

Airport-Concessionaire Relations

Services such as restaurants, book stores, giftshops, parking facilities, car rental companies,and hotels are often operated under concessionagreements or management contracts with the air-port. These agreements vary greatly; but in thetypical concession agreement, the airport extendsto a firm the privilege of conducting business onairport property in exchange for payment of aminimum annual fee or a percentage of the reve-nues, whichever is greater. Some airports preferto retain a larger share of revenues for themselvesand employ an alternative arrangement called amanagement contract, under which a firm is hiredto operate a particular service on behalf of theairport. The gross revenues are collected by theairport management, which pays the firm foroperating expenses plus either a flat managementfee or a percentage of revenues.

Revenues from concessions are very importantto an airport. At some, concessionaires and theircustomers yield more revenue to the airport thanairline fees and leases, resulting—in effect—incross-subsidy of air carriers by nonaviation serv-ice concessions.

Parking and automobile rentals are typicallylarge and important concessions at airports. De-

26 ● Airport System Development

spite growth in the use of buses and other high-occupancy vehicles, the continued importance ofparking and car rental revenues is indicative ofthe symbiotic relationship between the airport andthe automobile. An analysis of revenue sourcesat seven major airports found that public park-ing facilities were the largest nonairline source ofrevenues and that car rental revenues were the sec-ond largest. At two of these airports, the airportoperator’s share of parking and car rental fees(after concession or management fees were paid)constituted a larger revenue source than air car-rier landing fees. 5 At many locations, the park-

‘Peat, Marwick, Mitchell & Co., “Comparative Rate Analysis,Dade County Aviation and Seaport Departments, ” August 1982.

ing and car rental firms operating on the airportare complemented by (or are in competition with)similar services operating off the airport property.

Another important type of concessionaire is thefixed base operator (FBO), who provides servicesfor airport users lacking facilities of their own,primarily general aviation. Typically, the FBOsells fuel and operates facilities for aircraft serv-ice, repair, and maintenance. The FBO may alsohandle the leasing of hangars and rental of short-term aircraft parking facilities. Agreements be-tween airports and FBOS vary. In some cases theFBO constructs and develops his own facilities onairport property; in other cases the FBO managesfacilities belonging to the airport. FBOs also pro-vide service to some commuter and startup car-riers, especially those that have just entered a par-ticular market and have not yet established (orhave chosen not to set up) their own ground oper-ations. The presence of an FBO capable of serv-icing small transport aircraft can sometimes be in-strumental in a new carrier’s decision to serve aparticular airport.

In addition to concessionaires, some airportauthorities serve as landlord to other tenants suchas industrial parks, freight forwarders, and ware-houses, all of which can provide significant reve-nue. These firms may lease space from the airportoperator, or they may build their own facilitieson the airport property.

Airport-General Aviation Relations

The relationship between airport operators andgeneral aviation is seldom governed by the com-plex of use agreements and leases that characterizerelationships with air carriers or concessionaires.

General aviation (GA) is a diverse group. Atany given airport, the GA aircraft will be ownedand operated by a variety of individuals and orga-nizations for a number of personal, business, orinstructional purposes. Because of the variety ofownership and the diversity of aircraft type anduse, long-term agreements between the airportand GA users are not customary. GA users oftenlease airport facilities, especially storage spacesuch as hangars and tie-downs, but the relation-ship is usually that of landlord and tenant. Thereare instances where owners and operators of GA

Ch. 2—Organizations and Institutions ● 2 7

aircraft assume direct responsibility for capital de-velopment of an airport, but this is not common,even at airports where general aviation is a ma-jority user.

It must be remembered that while GA activi-ties make up about half of the aircraft operationsat FAA towered airports, the average utilizationof each aircraft is much lower than that of com-mercial aircraft. There are approximately 210,000GA aircraft, compared to about 4,000 commer-cial aircraft. Most GA aircraft spend most of thetime parked on the ground. Only a small num-ber, usually those operated by large corporationsas a sort of private airline for employees and highvalue goods, are used as intensively as commer-cial aircraft.

Thus, at the airport, the chief needs of GA areparking and storage space, along with facilitiesfor fuel, maintenance, and repair. While an air-liner may occupy a gate for an hour to loadpassengers and fuel, a GA user may need to parkan aircraft for a day or a week while the passenger

conducts business in town. At the user’s homebase, long-term storage facilities are needed, andthe aircraft owner may own or lease a hangar ortie-down spot. In most parts of the country, thechief airport capacity problem for GA is a short-age of parking and storage space at popular air-ports. At some airports in the Southwest and inCalifornia waiting lists for GA parking spaces areseveral years long.

Some airport operators deal directly with theirgeneral aviation customers. The airport manage-ment may operate a GA terminal, collect land-ing fees, and lease tie-downs or hangars to users.At some airports condominium hangars are avail-able for sale to individual users. It is not uncom-mon for corporations with aircraft fleets to ownhangar space at their base airport. Often, how-ever, at least some of this responsibility isdelegated to the FBO, who thus stands as a proxyfor the airport operator in negotiating with theindividual aircraft owners for use of airport fa-cilities and collecting fees.

PLANNING AND DEVELOPMENT RESPONSIBILITIES

The airport operator is principally responsiblefor planning and development of airport improve-ments, but as in the case of daily operating deci-sions, that responsibility is shared with manyother parties. The airlines and other users, con-cessionaires, FAA, the regional planning author-ity, and the surrounding communities may allhave an influence on planning decisions andsubsequent development.

Airport Users

The users with the strongest voice in airportplanning decisions, especially at large operationalhubs, are the air carriers, who negotiate individ-ually and collectively for short- and long-term im-provements that they believe will facilitate theiruse of the airport. Because carriers often under-write the bonds to pay for capital improvements,they have great influence, and their support iscrucial.

At airports where one or two carriers accountfor the majority of operations, decisions about air-

port development are sometimes dominated bythe needs and interests of those carriers. For ex-ample, there can be little doubt that AtlantaHartsfield was designed to serve the route struc-tures of Delta and Eastern Airlines—hub-and-spoke systems with a high volume of transferpassengers. On the other hand, the design ofDallas-Fort Worth was greatly influenced by thetype of service Braniff and American Airlines ex-pected to provide there —long-haul origin-destina-tion service, with little need for transfers withinthe airport. This design has been the source oflandside congestion in recent years as carriers havemade greater use of hub-and-spoke route struc-tures that require passengers to change planes.Major improvements are being undertaken at theairport to enlarge passenger waiting areas and im-prove internal traffic circulation.

Some “minority” carriers, even though they aresignatories to the long-term agreements, may nothave strong negotiating positions. For example,most airports are dominated by passenger carriers,even though revenues from cargo carriers may

28 . Aiport System Development

Photo credt: McDonne// Douglas

Air cargo moves mainly at night

make a significant contribution to the airportbudget. Air cargo carriers have different facilityneeds, e.g., they need ramp space and room forsorting cargo rather than gate space and terminallounges. In some cases, cargo carriers have beenunable to interest the majority of carriers in under-writing airport bonds to build cargo facilities, andthey have been forced to undertake developmentprojects on their own, even though they are alsopaying landing fees that are used to underwritedevelopment of passenger facilities.

General aviation, because of its disaggregatenature, is another group that often has little tosay in the airport planning process. However,aviation interest groups, trade associations, andfixed base operators may sometimes help to pres-ent the position of GA users to the airport op-erator.

Federal Government

The Federal Government is a major participantin airport planning and development. FAA ad-ministers Federal grants to airports for planningand for capital improvements. Since 1970, thesefunds have come from the user-supported Airportand Airway Trust Fund. In 1983, planning grantfunds authorized under the Airport ImprovementProgram amounted to about $8.8 million, andcapital development grants to almost $800 million. b

Federal funds may be spent only for certainclasses of projects. In general, eligible projects arethose for construction or improvement of facil-ities directly related to the use of aircraft—i.e.,runways, taxiways, and ramps. In recent years,

bSecond Annual Report of Accomplishments Under the AirportImprovement Program, Fiscal Year 1982 (Washington, DC: FederalAviation Administration, May 1984).

Ch. 2—Organizations and Institutions 29

eligibility has also been extended to include com-mon-use areas of passenger terminals and otherairport buildings related to the safety of personsor the provision of services to airport users. Fed-eral funds cannot be used for the construction ofrevenue-producing facilities such as hangars andautomobile parking areas or for building accessroads off the airport property.7

It has been suggested that the availability ofFederal funds at a favorable matching ratio hasencouraged airports to concentrate on those typesof improvements which are eligible for Federalaid. The Federal share for eligible improvementsranges from 70 to 90 percent depending on typeof project; but since airports make many improve-ments without Federal aid, the Federal share ofall capital investment at airports constitutes lessthan 40 percent. g This percentage is even less atlarge airports, where Federal monies often makeup less than 10 percent of the capital improve-ment budget. However, many operators of largeairports believe that Federal funding is importantfor financing improvements that they feel areneeded, but which the air carriers are reluctantto pay for.

FAA also influences airport operational deci-sions because it owns and operates the air trafficcontrol system, including the air traffic controltower, navigational equipment, and landing aidsat the airport itself. Airport improvements whichrequire installing, moving, or upgrading thisequipment have to be approved and carried outby FAA. Safety and operational standards for air-ports are also established by FAA. Airport facil-ities built with Federal funds must be designed inaccordance with these standards, which are pub-lished in the Federal Aviation Regulations or inFAA Advisory Circulars, manuals, and handbooks.

Finally, FAA does airport system planning. TheNational Airport System Plan (NASP), a 10-yearplan which was published in 1977 and updatedin 1980, includes those airports that meet FAA’scriteria of “national importance. ” In 1982 therewere 3,203 such airports. The NASP is not a com-pilation of individual airport development plans.

714 CFR 151.8Public Works Infrastructure: Policy Considerations for the 1980s

(Washington, DC: Congressional Budget Office, April 1983), p. 106.

Rather, it is a summary of projected improve-ments for each airport eligible for Federal aid, pre-pared by FAA based on information provided byindividual airports, state agencies, and FAA re-gional offices.

State Aviation Agencies

Forty-seven States have aviation agencies. Mostare within State departments of transportation,although eight are independent agencies or com-missions. State authority and activity vary wide-ly. All the States with aviation agencies providesome State financial assistance to airports. In mostcases this aid is primarily for capital improve-ments, although a few States make funds avail-able for high-cost operations and maintenanceitems such as snow removal equipment.9 In ad-dition, many State agencies provide some tech-nical and planning assistance, particularly tosmaller airports. Some States carry out ongoingplanning programs for a statewide airport system,complete with year-by-year scheduling for im-provements at individual airports, In many cases,States also install and maintain navigation equip-ment and landing aids.

Some State governments have planning and de-velopment responsibilities as owners and opera-tors of airports. Baltimore-Washington Interna-tional is owned by the State of Maryland, forexample, and Honolulu International is owned bythe State of Hawaii. In general, however, mostof the State-owned airports are general aviationrather than commercial service airports.

States provide much less airport developmentmoney than either the Federal Government or thelocal airport operators. As shown in table 7, Statespending in 1982 for airport construction and im-provement projects totaled $276 million. Thisaverages $5.5 million per State, but the actual dis-tribution is highly skewed. Table 7 shows that 25States spent less than $1 million each; 12 Statesspent between $1 million and $5 million, and 5spent between $5 million and $10 million. FiveStates—Alaska, Connecticut, Hawaii, Illinois,and New York—spent over $10 million for air-

‘National Association of State Aviation officials, DataBank 1983(Washington, DC: NASAO, 1983), p. 2.

30 ● Airport System Development

Table 7.-State Funding of Airport and Aviation Programs

. ,AL-IW82 - ‘ -- ‘ -- —

$ 200,75060,355,700

57,752——

100,700,000———

15,581,26850,000

—————

156,729303,434

3,008,291—

5,9&l——

20,000134,531

—131,607

———

20,000250,000

—115,000255,80090,000

2,657,255—————

538,199—————

$164,632,216

——

311,838——

500,000———

77,313,81050,000

————

32,000344,000

19,684,127—————

10,000223,760

27,000—

—25,000

——

407,7283,981,983

49,937—

5 , G—

10,000366,000

22,50040,647

——

103,405.330

402,721—

2,455,248750,000

2,200,000780,000300,000

5,030,500700,000

—454,000

10,269,2291,757,445

635,600—

610,0003,102,549

799,539375,000225,549

1,874,0003,983,500

70,000327,973220,000424,031

———

889,50027,700,00d

7,275,9671,479,000

550,000500,000150,000

1,365,000—

1,133,215143,182

1,600,0002,500,000

230,0008,300

428,000784,745330,951982,900

5,505,137

91,302.781

—

——

1,000,000

—

1,000,000—

————————

1,117,200—

228,471———

18,000————————

—885,004

—100,000

—

—72,600

———

4.421.275

—

—50,000

—25,000

—300,000

—30,000

9,000—

60,000—

100,900196,00027,00026,61822,000

600,000598,000

——

44,000266,292

—35,000

———

75,00020,000

———

59,22122,74930,46660,000

2,000,0612,20037,000

——

25,000—

4.751.446

603,47160,355,700

2,844,838800,000

4,200,000101,980,000

325,0005,030,0002,000,000

92,895,078624,000

10,278,2291,757,445

720,6000

710,9003,487,2781,797,973

23,214,520247,549

2,534,0006,003,600

70,000556,444294,000

1,048,6140

211,6070

889,50027,700,000

7,570,9671,774,000

550,000615,000813,528

5,436,9832,963,6962,040,968

173,6481,785,0002,500,0002,240,000

924,699560,100825,392330,951

1,227,9505,505,137

—1,255,200

60,000——

100,000—

250,00020,000

160,289—

31,000——

9,444—

180,00018,237

102,87618,522

145,000—

10,000—

26,0007,757

—30,000

——

33,000(191 ,Ooo)t

25,000———

68,338225,000124,020

—13,000

—45,00015,50051,700

—

(64,20;t—

391,018,775 3,017,883

SOURCE: National Association of State Aviation Officials, DataBank 1983 (Washington, DC: NASAO, 1983), pp. 9-10,

Ch. 2—Organizations and Institutions ● 3 1

port development; all of these except New Yorkand Illinois used these funds primarily for State-owned airports. The 28 States that made planningassistance funds available in 1982 spent a com-bined sum of about $3 million. However, about40 percent of this amount was spent by Alaskaalone.

Total State capita] assistance in 1982 for air-ports not owned by the State totaled $91 million.l”Often, these funds provided the State share of fed-erally funded projects. In other cases, State fundswere used where Federal grants were not avail-able for a project.

Despite the small amount overall, the State roleis a vital one, especially for smaller airports. FewGA airports or small commercial service airportshave the in-house staff to make traffic forecastsor to plan facility improvements. In addition, be-cause small airport operators often do not havethe technical expertise to complete an applicationfor Federal assistance, State agencies are activein helping them through this process. Most Stateaviation agencies concentrate their resources onhelping small commercial service and GA airportsbecause they have found that large commercialairports can take care of themselves. Indeed, mostState aviation agencies do not have the staff andexpertise to deal with the details of planning andcarrying out projects at major commercial serv-ice airports. In the case of major airports, the Staterole may simply be to keep informed of develop-ment activities and perhaps to provide some Statematching funds.

State control over the distribution of Federalairport development funds varies widely withState law. In most cases, grants from FAA to air-ports for federally approved projects completelybypass the State agency, Some States, however,have channeling acts which give them some con-trol over Federal funds. In these cases, projectsmust have State, as well as Federal, approvalbefore the grant can be awarded to the airport.In some cases, too, State law requires that theState act as agent for Federal grant recipients, sothat the State receives the funds and passes themthrough to the airport.

IOIbid., pp. 9-10.

Regional Planning Agencies

Many States have created regional planningauthorities that combine planning and develop-ment functions. Regional planning responsibilitiesare sometimes assumed by Councils of Govern-ments or similar associations of municipalities ina metropolitan area. Some regional agencies con-duct extensive transportation and land use plan-ning in their areas of jurisdiction and may be in-volved in plans for siting new airports or forexpanding existing facilities.

Regional agencies are seldom involved in theactual project execution, but they can have greatinfluence over the availability of funds. In someStates, their approval of a master plan or of in-dividual projects is required for the release of Stategrant funds. Often these same agencies are alsoresponsible for approving the release of Federalfunds. Rules for the release of Federal funds formajor projects was formerly governed by Officeof Management and Budget Circular A-9s, underwhich regional agencies were required to reviewmajor projects to certify that they met Federalguidelines on the use of grant moneys by Stateand local governments and to ensure that suffi-cient planning had gone into the project.

This procedure has changed somewhat since therelease of Executive Order 12372. Under the newprocedure, Federal agencies, such as FAA, are stillrequired to consult and cooperate with State andlocal governments in the administration of Fed-eral assistance and development programs, butthe intent is to give the States more latitude indetermining criteria for acceptable projects. Al-though Executive Order 12372 places more em-phasis on State priorities, the effect is still to re-quire Federal, State, and local agreement beforefunds are released for major projects. In manycases, the approval power remains in the handsof the same regional planning agencies which han-dled the A-9s review process.

Other Parties

A commercial airport serves thousands, oftenmillions, of airline passengers Despite their largenumber, however, passengers typically have noformal way to voice opinion on the service beingoffered or to influence future airport plans. How-

32 ● Airport System Development

Photo credit: Federal Aviation Administration

The wait begins

ever, the passengers’ behavior—in terms of thepreferred hours of travel and the preferred modefor arriving at the airport-will greatly affect howthe airport operates, and passenger behavior isa frequent subject of study by airport planners.Moreover, passengers do have the ability to “votewith their feet” in areas where there is a choiceof airports. Passenger preference is often amongthe reasons that one airport in a region is under-utilized. If utilization of the airport is to be in-creased, the operator or the carriers must improvethose features that passengers object to—e.g., in-adequate groundside access, infrequent flights, orinconvenient parking.

The actions of concessionaires and off-airportfirms offering services on the airport property cangreatly affect airport development. Often thesefirms have little say in the long-range planningdecisions. Where airport facilities do not accom-modate their needs, improvised solutions maycontribute to congestion and delay. For example,the use of high-occupancy vehicles, such as shut-tle buses, for airport access and circulation shouldtend to reduce curbside congestion. However,ground access delays at some airports have ac-tually been worsened by the uncontrolled pro-liferation of private shuttle bus services offered

by car rental firms, hotels, and others to carrypassengers from the terminal to remote locations.In some cases, inviting these firms to participatein an earlier stage of the planning process and de-signing facilities to match the needs of shuttlebuses rather than automobiles might have resultedin better coordination of airport circulation andless curbside congestion.

Nearly all commercial service airports are pub-licly owned, most by municipal governments. Thecity government which is also an airport spon-sor must balance the economic benefits of the air-port against any direct and indirect costs the air-port may impose. The city government is re-sponsible for a number of services which are vitalto the airport but beyond the control of the air-port manager—e.g., highway construction andmass transit access. Elected officials must chooseto allocate funds between projects that might ben-efit the airport and those related to other muni-cipal services such as hospitals, schools, and hous-ing. The airport is seldom the first priority of thecity government.

Other local governments may be involved in,or affected by, the airport planning process. Manymajor airports are surrounded by several munic-ipalities. Some of these communities may bebothered by noise, automobile traffic, or otherproblems generated by the airport. Other com-munities may control services necessary to oper-ation of the airport. In addition, the interests ofindividuals surrounding the airport may be rep-resented not only by local governments but bypublic interest groups organized around a particu-lar issue. These groups and individuals may bebrought into the airport planning process throughpublic hearings and other means, but their effec-tiveness and degree of participation vary widelyas a function of the receptiveness of airport oper-ators and the aggressiveness with which thesegroups pursue their interests.

CAPITAL IMPROVEMENT

The most obvious solution to the problem of isting one through construction of new runways,airside delay at a busy airport is to increase ca- gates, terminals, or whatever is needed. Nearlypacity through capital improvements—either by all the major airports in the United States havebuilding another airport or by expanding the ex- gone through at least one period of major capital

Ch. 2—Organizations and Institutions ● 3 3

improvement, many of them in the late 1960s andearly 1970s to accommodate jet aircraft. As a solu-tion to delay problems, however, construction ofnew airport facilities is not without problems, andairport operators can run into a number of dif-ficulties in attempting major airport constructionor expansion.

First of all, an airport is a system of interdepen-dent parts. Major expansion of one part may ne-cessitate expansion of another. For example, ad-ding new runways and increasing the number ofairside operations will result in the need for newgates and more terminal waiting areas for passen-gers, and possibly larger automobile parking areasand access roads with higher capacity. Becauseof the piecemeal way in which these differenttypes of development may be handled, a bottle-neck is often not eliminated, but simply movedto another point.

Another problem often encountered in expan-sion is the lack of suitable land. Many airportsare closely surrounded by urbanized areas, landthat would be extremely expensive to acquire. Al-though most airports were originally located onthe edge of metropolitan areas, cities have ex-panded over the years to surround many of them.Some of this development, especially commercialand industrial uses, was actually drawn to the areaby the proximity to air transportation. Residen-tial uses often spring up if land use controls areinadequate. Once communities become estab-lished in the vicinity, the airport is often perceivedas a poor neighbor—generating noise, traffic con-gestion, and other annoyances for the surround-ing communities. Residents may oppose plans forairport expansion that would increase any of theseproblems.

This is not to say that expansion of a major air-port is impossible. St. Louis Lambert, for instance,greatly increased airside and terminal capacityover a period of 5 years through development ofan existing location. Improvements includedlengthening existing runways and taxiways, ter-minal expansion, and construction of new gates.A major factor was the Environs Plan, a programto mitigate noise problems by installing sound in-sulation in residential buildings and purchasingproperty to serve as a noise buffer zone.

Chicago O’Hare is beginning a major expan-sion of terminal facilities, which will include con-structing new loading gates and ramp areas andrebuilding parts of the taxiway system. At onetime, construction of an additional runway wasalso considered, but then dropped in later plan-ning stages. Studies indicated that an additionalparallel runway would not provide a capacity in-crease great enough to justify the high cost. His-torically, congestion problems at O’Hare have pri-marily been due to lack of gate space. The newrunway would have required land acquisition andrelocation of buildings. It would also have gen-erated additional noise and led inevitably to con-flicts with airport neighbors.

Expansion is expensive. At St. Louis, the noiseabatement program alone (without which the ex-pansion probably would not have been possible)is expected to cost about $50 million over a 20-year period. The expansion of Chicago O’Hareis expected to cost about $1 billion. Adding thenew runway would have increased the cost by 25percent.

Building a new airport far enough from popu-lous areas to avoid noise problems and to takeadvantage of lower land prices is a desirable alter-native. Ideally, the new airport site should be largeenough to provide both room for growth and ex-tensive buffer zones to protect it from encroachingurban development—a tract of many thousandsof acres. The Dallas-Fort Worth airport covers anarea of 17,600 acres and has agreements protect-ing an additional 4,000 acres; but, even there,noise is an issue as incompatible urban develop-ment moves closer to the airport.

In many metropolitan areas, a suitable tract ofland might be distant from the city center, mak-ing ground access a problem. In selecting a dis-tant site, several questions arise. If a new airportis a supplement to, rather than a substitute for,the existing airport, would passengers be willingto travel that far to use it? Would air carriers bewilling to serve an airport that might attract fewerpassengers than the old airport? That the answerto these questions can sometimes be “no” is dem-onstrated in the case of Dunes and National air-ports in Washington, DC.

— — . .

34 . Airport System Development

Because of the increasing public concern aboutaircraft noise, community reaction against thepossible siting of an airport has presented prob-lems even in relatively underpopulated areas. Theexpansion of Lambert airport was made necessarybecause of the collapse of plans to build anotherairport outside of St. Louis. The vigorous opposi-tion by citizen groups and local governments sur-rounding the proposed new site was a major fac-tor in the decision not to build a new airport. Thisconcern affects not only sites for commercial air-ports but also for GA and relievers airports.

Difficult as it is to find land for new airports,the task is becoming increasingly imperative insome cities. Many observers are pessimistic aboutthe likelihood of constructing new major airports.The FAA, in the 1981 National Airspace SystemPlan, states that: “few new air carrier airports areanticipated and most major airports have limited

AIRCRAFT NOISE

Aviation noise is a fact of life at today’s air-ports and a major, perhaps the major, constrainton airport expansion and development. Citizensliving around airports have complained that avia-tion noise is annoying, disturbs sleep, interfereswith conversation, and generally detracts fromthe enjoyable use of property. There is increas-ing evidence that high exposure to noise hasadverse psychological and physiological effects.People repeatedly exposed to loud noises may ex-hibit high stress levels, nervous tension, and in-ability to concentrate.

Conflicts between airports and their neighborshave occurred since the early days of aviation,but airport noise became a more serious issue withthe introduction of commercial jet aircraft in the1960’s. FAA estimates that the land area affectedby aviation noise increased about sevenfold be-tween 1960 and 1970. Even with this increase, theactual number of people affected by aviation noiseis relatively small. It has been estimated that 6million to 7 million people in the United States(under 5 percent of the population) experience sig-nificant annoyance due to aviation noise; about10 percent of these people live in areas of severe

noise impact .13become a majornities.

Nevertheless,political issue

airport noise hasin certain commu-

New aircraft are much quieter than earlier jets,and the noise levels at the busiest large airportshave been reduced to the point that communityopposition has abated in some instances, Denver,Atlanta, Houston, and Dallas-Fort Worth havebeen able to secure community agreement to pro-ceed with airport expansion projects, includingnew runways. Expansion of terminal buildings,which implies an increase in air traffic, has alsobeen accepted in New York and Chicago. On theother hand, noise levels threaten to increase asjet traffic is introduced at secondary airportsin some metropolitan areas. Santa Ana (JohnWayne) and Westchester County are notable ex-amples of airports where the surrounding com-munities are pressing for curfews and other air-port use restrictions.

Another trend that may intensify the noiseissue is continuation of residential encroachmentaround airports. As more people come to live in

13Norman Ahford and Paul H. Wright, Airport Engineering (NewYork: John Wiley & Sons, 1979).

Ch. 2—Organizations and Institutions ● 3 5

Photo credit: EPA-Documerica, Michael Philip Manheim

Homes under the approach path to Boston Logan

noise impact areas, the opportunities for annoy-ance increase. Equally important, the public hasbecome more sensitive to the issue, and it hasbecome highly politicized. Airport neighbors havesued airports for mental anguish as well as thereduced property values related to noise exposure.Airport operators have begun to adopt noiseabatement and mitigation measures so as to re-duce their liability and protect themselves in legalproceedings. The noise issue has been instrumentalin slowing or stopping several airport expansionprograms.

Federal Responsibilities

FAA’s role is defined in a 1968 amendment tothe Federal Aviation Act of 1958.14 The amend-ment charges the FAA Administrator to “prescribeand amend such rules and regulations as he mayfind necessary to provide for the control andabatement of aircraft noise and the sonic boom. ”FAA has worked to alleviate noise by controllingthe source—i. e., quieting the aircraft and its en-gine. Federal Aviation Regulations (FAR) Part 36establishes noise standards for newly manufac-tured aircraft engines. Air carriers are replacingnoisy aircraft with new ones meeting these stand-ards, so that noncomplying commercial aircraft

1449 LJ. S.C. 1301 et. seq.

will eventually be phased out of the fleet. FAAhas controlled sonic boom by prohibiting super-sonic operations over land by civil aircraft. Mili-tary supersonic flights continue, but in a carefullycontrolled manner.

FAA has established guidelines for measure-ment of noise and suggested a procedure for car-rying out local noise studies and abatement pro-grams. Because FAA also has the authority andresponsibility to control aircraft in flight and toprescribe flight paths, it assists local airport oper-ators in developing noise mitigation proceduresto suit their area.

FAA has been reluctant to impose a specificFederal standard for airport noise, as this mightexpose the Federal Government to liability fordamages if the standard were to be exceeded. Cur-rent policy is that FAA shares responsibility fornoise abatement, but does not bear liability. Re-cent statements by the FAA Administrator andthe Secretary of Transportation have reempha-sized that local governments and airport opera-tors must take the lead in reducing airport noise.On the other hand, FAA discourages the prolifera-tion of stringent local rules which may have a con-straining effect on airport capacity or on interstatecommerce.

Measurement of Noise

There are several methods for measuring air-craft noise and its effect on a community. Thelevel of sound can be measured objectively; butnoise—unwanted sound—is a very subjectivematter, both because the human ear is more sen-sitive to some frequencies than others and becausethe degree of annoyance associated with a noisecan be influenced by psychological factors suchas the hearer’s attitude or the type of activity inwhich engaged. Techniques have been developedto measure single events measured in units suchas dBA (A-weighted sound level in decibels) orEPNdB (Effective Perceived Noise Decibels).These measure the level of noise in objectiveterms, giving extra weight to those sound frequen-cies that are most annoying to the human ear.

In some cases, annoyance is due not only tointensity of a single event, but to the cumulativeeffects of exposure to noise throughout the day.

36 ● Airport System Development

Methods to measure this effect objectively includeaggregating single event measures to give a cumu-lative noise profile by means of such techniquesas the Noise Exposure Forecast (NEF), the Com-munity Noise Equivalent Level (CNEL), and theDay-Night Average Sound Level (Ldn). FM usesEPNdB to measure single event aircraft noise aspart of its aircraft certification process. FAA hasestablished dbA as the single event unit and theLdn system as the standard measure of cumula-tive noise exposure to be used by airports in thepreparation of noise abatement studies.

FAA has suggested, but not mandated, guide-lines for determining land uses that are compati-ble with a given Ldn level. Ideally, residential usesshould be located in areas below 65 Ldn. In thehigh noise impact areas (Ldn 80 to 85 or more)FAA suggests that parking, transportation facil-ities, mining and extraction, and similar activi-ties are the most compatible (see table 8).

Noise and Land Use

The problem of aviation noise is intimately con-nected with the question of land use since one ofthe most effective insulators against annoyingsound is distance. If possible, an airport shouldbe surrounded by a noise buffer area of vacantor forested land, and the private property nearthe high noise impact area (e.g., under approachand departure paths and near aeronautical sur-faces) should be used for activities that are lesssensitive to noise—agriculture, highway inter-changes, manufacturing, and other activitieswhere a high level of ambient noise does not de-tract from performance. Unfortunately, many air-ports are surrounded by buildings devoted to in-compatible activities—e.g., residences, schools,and auditoriums.

Zoning and land use planning are responsibil-ities of local governments. In many cases thesegovernments have been unable or unwilling toprovide mutual protection for airports and resi-dential development. Land is a scarce resource inurban areas; and where there is great demand forhousing and shopping centers, underutilized landaround airports becomes extremely valuable.Even where local governments have enacted zon-ing ordinances to prevent encroachment, devel-

opers have been able to gain waivers. The taxrevenues generated by the higher land uses mayseem more important to city governments thanthe long-range need to protect the airport and theresidential areas from one another. In some cases,local governments trying to enforce zoning ruleshave had them overturned when developers con-tested them in court.

At least part of the problem is ineffective in-tergovernmental cooperation. Few airports are lo-cated entirely within the borders of the munic-ipality that owns and operates the facility.Surrounding municipalities may have conflictingpractices, priorities, and philosophies of govern-ment; and each has separate zoning authority. Forinstance, St. Louis-Lambert Airport is surroundedby 29 municipalities, and Dallas-Fort Worth by10. A municipality that owns an airport perceivesadvantages and disadvantages, and it must weighthe economic benefits of the airport against theproblems of noise. A municipality that merelyborders on an airport may see only disadvantages.Further, because the airport operator has soleliability for damage due to airport noise, somesurrounding municipalities have felt little need toenforce zoning rules when complaints will not bedirected to them but to the municipality that ownsand operates the airport.

Even where sound intergovernmental agree-ments on zoning have been developed, time canerode them. When Dallas-Fort Worth airport wasbeing planned and built, the surrounding munic-ipalities developed agreements on zoning thatwere viewed as models of intergovernmental co-operation and coordination. Over the interven-ing years, there have been changes in local govern-ment, in priorities, and in the local economy.There is now encroaching development such thatDallas-Fort Worth now has noise problems, de-spite its huge 17,600-acre size.

Local Noise Abatement Programs

While aircraft are the source of noise at air-ports, aircraft operators are not liable for dam-age caused by noise. The courts have determinedthat the sole legal liability for aircraft noise restswith the airport operator. The Federal Govern-ment, by law and administrative action, has

Ch. 2—Organizations and Institutions ● 3 7

Table 8.—Land Use Compatibility With Yearly Day-Night Average Sound Levels

Yearly day-night average sound level (Ldn) in decibels

Land use <65 65-70 70-75 75-80 80-85 >85

Residential:Residential, other than mobile homes and transient lodgings . . . . . . . .Mobile home parks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Transient lodgings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . .

Public use:Schools, hospitals and nursing homes . . . . . . . . . . . . . . . . . . . . . . . . . . . .Churches, auditoriums, and concert halls . . . . . . . . . . . . . . . . . . . . ., . . .Governmental services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Transportation . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . .Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commercial use:Offices, business and professional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wholesale and retail—building materials, hardware and farm

equipment, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..., . . . . . .Retail trade—general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Manufacturing and production:Manufacturing, general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Photographic and optical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Agriculture (except Livestock) and forestry . . . . . . . . . . . . . . . . . . . . . . . . .Livestock farming and breeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Mining and fishing, resource production and extraction . . . . . . . . . . . . .

Recreational:Outdoor sports arenas and spectator sports . . . . . . . . . . . . . . . . . . . . . . .Outdoor music shells, amphitheaters . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nature exhibits and zoos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Amusements, parks, resorts and camps . . . . . . . . . . . . . . . . . . . . . . . . . . .Golf courses, riding stables and water recreation . . . . . . . . . . . . . . . . . . .

YYY

YYYYY

Y

YYYY

YYYYY

YYYYY

N a

NN a

2525

YYY

Y

YYYY

YYYfY’Y

Ye

NYYY

N a

NN a

303025Yb

Yb

25

Yb

25Yb

25

Yb

25yLly~Y

Ye

NNY

25

NNN a

NN

30Yc

Yc

30

Yc

30Yc

30

Yc

30Ye

NY

NNNN

30

NNN

NNNYd

Yd

N

Yd

NY d

N

Yd

NYh

NY

NNNNN

NNN

NNNYd

N

N

NNNN

NNYh

NY

NNNNN

preempted control of aircraft in flight. Becausethe Federal Government is immune from suit(without its consent) and because the aircraft oper-ate under Federal regulation, litigants with com-plaints about aircraft noise have no recourse butto the airport operator. Courts have consistently

held that the airport proprietor has the authorityto control the location, orientation, and size ofthe airport and from that authority flows theliability for the consequences of its operation, in-cluding the responsibility to protect citizens fromresidual noise. Litigants have used various ap-

38 Airport System Development

preaches in suing airports and have collecteddamages on the grounds of trespass, nuisance, andinverse condemnation.

Balancing their extensive exposure to liabilityclaims, airport operators have some authority—albeit limited—to control the use of their airportsin order to reduce noise. Basically, any restric-tion of operations at the airport must be non-discriminatory. Further, no airport may imposea restriction that unduly burdens interstate com-merce. The definition of “undue burden” is notprecise, and restrictions at individual airportsmust be reviewed on a case-by-case basis. Restric-

Photo credt: Oorn McGr8fh, Jr.

Noise contour map

tions must be meaningful and reasonable—i.e.,a restriction adopted to reduce noise should ac-tually have the effect of reducing noise. Finally,local restrictions must not interfere with safety orthe Federal prerogative to control aircraft in thenavigable airspace.

Under FAR Part 150, airport operators canundertake noise compatibility studies to determinethe extent and nature of the noise problem at agiven airport. They can develop noise exposuremaps indicating the contours within which noiseexposure is greater than a permissible level. Theycan identify the noncompatible land uses withinthose contours and develop a plan for mitigatingpresent problems and preventing future ones. Un-fortunately, the airport operator’s ability to pre-vent future problems is usually very limited.Unless the airport actually owns the land in ques-tion, the authority to make sure it is reserved fora compatible use is usually in the hands of a mu-nicipal zoning commission.

Many of these noise abatement programs al-lowed under current legislation are eligible forFederal aid. They include:

●

●

●

●

●

●

●

takeoff and landing procedures to abate noiseand preferential runway use to avoid noise-sensitive areas (which must be developed incooperation with and approved by FAA);construction of sound barriers and sound-proofing of buildings;acquisition of land and interests therein, suchas easements, air rights, and developmentrights to ensure uses compatible with airportoperation;complete or partial curfews;denial of airport use to aircraft types orclasses not meeting Federal noise standards;capacity limitations based on the relativenoisiness of different types of aircraft; anddifferential landing fees based on FAA-cer-tificated noise levels or on time of arrival anddeparture.ls

Ch. 2—Organizations and /institutions 39

FAA provides assistance to airport operatorsand air carriers in establishing or modif ying flightpaths to avoid noise-sensitive areas. In some cases,aircraft can be directed to use only certain run-ways, to stay above minimum altitudes, or to ap-proach and depart over lakes, bays, rivers, or in-dustrial areas rather than residential areas.Procedures may be developed to scatter the noiseover several communities through some “equitable”rotation program. These noise-abatement proce-dures can have a negative effect on airport capac-ity. They may require circuitous routing of air-craft or use of a runway configuration that is lessthan optimum with respect to capacity.

Restrictions on airport access or on the num-ber of operations have an even more deleteriouseffect on airport capacity. One form of restric-tion is the night curfew, which effectively shutsdown the airport during certain hours. Only a fewairports have officially instituted curfews. Onesuch is Washington National Airport, which hasa curfew based on FAA-certificated noise stand-ards. Aircraft with noise ratings over 72 dbA on

takeoff or 85 dbA on approach may not use theairport between 10:00 p.m. and 7:00 a.m. Thiseliminates nearly all jet operations. Some otherairports have reached informal agreements withcarriers to refrain from operations after a certainhour, and some, like Cleveland, impose a curfewby not supplying jet fuel at night.

Air carriers are concerned about the spread ofcurfews as a noise abatement tool because theycan play havoc with airline scheduling and reducethe capacity of the entire national airport system.Imposition of curfews at even two or three ma-jor airports on the east and west coast could re-duce the “scheduling window” for transcontinen-tal flights to only 4 or 5 hours daily (see fig. 3)and would also affect flights within each region.Curfews are especially threatening to air cargooperators, whose business is typically conductedat night. Some see widespread imposition of cur-fews as a burden on interstate commerce, andhence unconstitutional.

Other types of airport access restrictions—excluding certain aircraft types, instituting special

Photo credit: Dorn McGrath, Jr

Land bought and cleared of houses at Playa del Rey, west of Los Angeles

25-420 0 - 84 - 4

—

40 ● Airport System Development

Figure 3.—Effects of Curfews on Scheduling Transcontinental Service

Departure time Eastbound nonstop ~ A r r i v a l t i m ewest coast 5+ hours and 3 time zones east coast

8

f i

4

Open for10 scheduling nonstops 6

Noon 8

Curfew10 pm—7 amwest coastairports

Midn

10

Midnight

2

4

6

Curfew10 pm—7 ameast coastairports

8

10

Noon

2

3

fees for noncomplying aircraft, or establishinghourly limits based on a “noise budget’’—are sub-ject to the legal tests of nondiscrimination andreasonableness. For example, the ban on jet air-craft instituted at Santa Monica airport was struckdown by the court in 1979 because many new-technology jet aircraft that would have beenbanned by such a rule are quieter than the pro-peller-driven aircraft that would have been al-lowed to operate. A later ordinance by the city,banning operations by aircraft with a single-eventnoise rating of 76 dBA, was upheld. The courtrejected the argument that enforcement of a local

standard violates Federal preemption .16 On theother hand, a Federal court struck down in 1983the curfew-quota system in effect at WestchesterCounty airport in New York. Under that system,an average of only six aircraft with noise ratingsabove 76 dBA were permitted to land between thehours of midnight and 6:30 a.m.

Ch. 2—Organizations and Institutions 41

ing those markets. According tomates, such acceleration would benancial means of many airlines.

Federal funds are available to

Boeing’s esti-beyond the fi-

assist airportoperators in soundproofing buildings or buyingnoise-impacted land. Usually, these are extremelyexpensive remedial measures, but a number of air-ports have been forced to undertake them. St.Louis Lambert Airport expects to spend about $50million over the next 20 years under its EnvironsPlan. The airport has soundproofed some build-ings and returned them to public use. In othercases, it has purchased land and resold it for morecompatible use. In some cases, the land was“sterilized,” that is, the buildings were torn downand the land left vacant as a noise buffer zone.

Chapter 3

THE PROBLEM OFCAPACITY AND DELAY

-

1Photo credlf Federal Avlatlon Admlnfsfratfon I

Contents

PageCapacity, Demand, and Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4S

Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Factors Affecting Capacity and Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Airfield Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Airspace Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Air Traffic Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Meteorological Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Demand Characteristics. , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Measurement of Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Cost of Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

List of Tables

Table No. Page

9. Air Carrier Delays Reported to NASCOM, 1976-83 . . . . . . . . . . . . . . . . . . . . . . 5110. SDRS Trends, 1976-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5211. Distribution of SDRS Delay Time by Flight Phase, September 1982.. . . . . . . 5212. Delay at Selected Airports, 1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

List of Figures

Figure No. Page4. Theoretical Relationship of Capacity and Delay . . . . . . . . . . . . . . . . . . . . . . . . . . 465. Relationship Between Throughput and Practical Capacity . . . . . . . . . . . . . . . . . . 476. Typical Probability Distribution of Aircraft Delay . . . . . . . . . . . . . . . . . . . . . . . . 47

Chapter 3

THE PROBLEM OFCAPACITY AND DELAY

A major concern of airport users and opera-tors is delay. Flights cannot be started or com-pleted on schedule because of the queue of air-craft awaiting their turn for takeoff, landing, oruse of taxiways and gates at terminal buildings.These delays translate into increased operatingcosts for airport users and wasted time for pas-sengers. The cause for this delay is commonly re-ferred to as a “lack of capacity,” meaning that theairport does not have facilities such as runways,taxiways, or gates in sufficient number to accom-modate all those who want to use the airport atpeak periods of demand.

The solutions generally advocated by airportoperators, airlines, and the Federal AviationAdministration (FAA) are to build additional fa-cilities at crowded airports or to find ways tomake more efficient use of existing facilities. Thelatter course is viewed as attractive because it re-

quires less capital investment and avoids manyof the problems associated with increasing the sizeof the airport and infringing on the surroundingcommunities. A third course advocated by someis not to increase capacity but to manage demandby channeling it to offpeak times or to alternatesites. The rationale underlying all these approachesis that capacity and demand must somehow bebrought into equilibrium in order to prevent orreduce delay.

The relationship of capacity, demand, and de-lay is considerably more complex than the forego-ing suggests. Before addressing solutions, it is nec-essary to look more closely at matters of definitionand to examine how and where delays occur. Itis also necessary to look at specific airports wheredelays are now being encountered to obtain aclearer picture of the severity of the problem andthe points at which it could be attacked.

CAPACITY, DEMAND, AND DELAY

Capacity generally refers to the ability of anairport to handle a given volume of traffic (de-mand)—i.e., it is a limit that cannot be exceededwithout incurring an operational penalty.1 As de-mand for the use of an airport approaches thislimit, queues of users awaiting service begin todevelop, and they experience delay. Generallyspeaking, the higher the demand in relation tocapacity, the longer the queues and the greaterthe delay.

De Neufville explains the relationship of ca-pacity, demand, and delay thus:

The performance of a service system is, indeed,sensitive to the pattern of loads especially whenthey approach its capacity. The capacity of a serv-ice facility is, thus, not at all similar to our no-

tion of capacity in everyday life, that is, the vol-ume that a bottle or other vessel can hold. Abottle will accommodate any amount of liquid upto its capacity equally well; and after that, it canhold no more. A service facility, on the otherhand, does not provide equal service at all times;its service rapidly deteriorates as traffic nearscapacity. A service facility, can, furthermore,eventually handle more than its immediate ca-pacity by delaying traffic until an opportunity forservice exists. z

The illustration of this theoretical relationshipin figure 4 shows that delay is not a phenomenonoccurring only at the limit of capacity. Someamount of delay will be experienced long beforecapacity is reached, and it grows exponentiallyas demand increases.3

‘R. De Neufville, Airport Systems Planning (London: Macmillan,1976), p. 135.

3The term congestion, referring to the condition where demandapproaches or exceeds capacity, is not commonly defined in thetechnical literature and is used in this report only as a qualitativedescriptor of a situation where demand is high in relation to capacity.

45

46 . Airport System Development

Figure 4.—Theoretical Relationship of Capacityand Delay

Demand (number of operations)SOURCE: Office of Technology Assessment,

Capacity

There are two commonly used definitions ofairfield capacity: “throughput” and “practicalcapacity. ” The throughput definition of capacityis the rate at which aircraft can be handled—i. e.,brought into or out of the airfield, without regardto any delay they might incur. This definitionassumes that aircraft will always be present wait-ing to take off or land, and capacity is measuredin terms of the number of such operations thatcan be accomplished in a given period of time.Practical capacity is the number of operations(takeoffs and landings) that can be accommodatedwith no more than a given amount of delay,usually expressed in terms of maximum accept-able average delay. Practical Hourly Capacity(PHOCAP) and Practical Annual Capacity (PAN-CAP) are two commonly used measures based onthis definition.4 PANCAP, for example, is definedas that level of operations which results in notmore than 4 minutes average delay per aircraftin the normal peak 2-hour operating period.5

4Airfield and Airspace Capacity/Delay Policy Analysis, FAA-APO-81-14 (Washington, DC: Federal Aviation Administration, Of-fice of Aviation Policy and Plans, December 1981).

5Airside Capacity Criteria Used in Preparing the National Air-port pLAN, AC 150/5060-lA (Washington, DC: Federal Aviation Ad-ministration, July 1968).

Delay

Delays occur on the airfield whenever two ormore aircraft seek to use a runway, taxiway, gate,or any other airside facility at the same time. Onemust wait while the other is accommodated. Ifall users of the airfield sought service at evenlyspaced intervals, the airfield could accommodatethem at a rate determined solely by the time re-quired to move them through the facility.

Aircraft, however, arrive and leave not at a uni-form rate but somewhat randomly, which meansthat delay can occur even when demand is lowin relation to capacity. Further, the probabilityof simultaneous need for service increases rapidlywith traffic density, so that the average delay peraircraft increases exponentially as demand ap-proaches throughput capacity. When demand ex-ceeds capacity, there is an accumulation of air-craft awaiting service that is directly proportionalto the excess of demand over capacity. For ex-ample, if the throughput capacity of an airfieldis 60 operations per hour and the demand rate isrunning at 70 operations per hour, each hour willadd 10 aircraft to the queue awaiting service and10 minutes to the delay for any subsequent air-craft seeking service. Even if demand later dropsto 40 operations per hour, delays will persist forsome time since the queues can be depleted at arate of only 20 aircraft per hour.

Figures indicates the relationship between prac-tical and throughput capacity. As demand ap-proaches the limit of throughput capacity, delaysincrease sharply and, theoretically, become in-finite when demand equals or exceeds through-put capacity. Practical capacity, which is alwaysless than throughput capacity, is that level of air-field utilization which can be attained with nomore than some acceptable amount of delay.

The acceptability of delay is the key to the con-cept of practical capacity. Unlike throughputcapacity, which can be objectively determined byanalysis of airfield components and traffic pat-terns, practical capacity is value judgment-a con-sensus among airport users and operators—abouthow much delay they can tolerate.

Although practical capacity is usually stated interms of an average figure, the acceptability of

Ch. 3—The Problem of Capacity and Delay . 47

As demand approaches

delay is actually determined not so much by theaverage but by the probability that the delay fora given aircraft will be greater than some amount.Just as demand tends to be nonuniformly distrib-uted, so, too, is delay. Figure 6 shows a typicaldistribution of delays encountered by aircraft ata particular level of demand. Note that most de-lays are of short duration and that, even though

Figure 5.— Relationship Between Throughput andPractical Capacity

/

III

Maximum acceptabledelay

- — — — - - - — - - - - - - -

Demand (number of operations)SOURCE: Office of Technology Assessment,

r - ,

Photo credif Federa/ Aviation Administration

capacity, queues develop

the average delay is low (5 minutes), there are afew aircraft encountering relatively long delaysof 15 minutes or more. Thus, while practicalcapacity is usually specified as that level of oper-ations which—on average—will result in a givenamount of delay, it is understood that the aver-age implies that some percentage of delays willbe considerably longer.

Figure 6.–Typical ProbabilityAircraft Delay

Distribution of

Average delay per

~ a i rcraf t (5 min. )

I c s I v

Delay per aircraft (minutes)

SOURCE: Office of Technology Assessment

.

. Airport System Development

How much delay is acceptable? This is a judg-ment involving three factors. First, it must be rec-ognized that some delay is unavoidable since itoccurs for reasons beyond anyone’s control—wind direction, weather, aircraft performancecharacteristics, the randomness of demand forservice. Second, some delay, though avoidable,might be too expensive to eliminate—i.e., the costof remedial measures might exceed the potentialbenefit. Third, even with the most vigorous and

successful effort, the random nature of delaymeans that there will always be some aircraft en-countering delay greater than some “acceptable”length. Thus, acceptable delay is essentially a pol-icy decision about the tolerability of delay beinglonger than some specified amount, taking intoaccount the technical feasibility and economicpracticality of available remedies. b

bAirfie/d and Airspace Capacity/Delay Policy Analysis, op. cit.

FACTORS AFFECTING CAPACITY AND DELAY

The capacity of an airfield is not constant overtime; it may vary considerably during the day orthe year as a result of physical and operationalfactors such as airfield and airspace geometry,air traffic control rules and procedures, weather,and traffic mix. When a figure is given for air-field capacity, it is usually an average based eitheron some assumed range of conditions or on ac-tual operating experience.

In fact, it is the variability of capacity, ratherthan its average value, that is more detrimentalto the overall operation of an airfield. Much ofthe strategy for successful management of an air-field involves devising ways to compensate forfactors that, individually or in combination, actto lower capacity or to induce delay. These fac-tors can be grouped in five categories.

Airfield Characteristics

The physical characteristics and layout of run-ways, taxiways, and aprons are basic determi-nants of the ability to accommodate various typesof aircraft and the rate at which they can be han-dled. Also important is the type of equipment(lighting, navigation aids, radar, and the like) in-stalled on the airfield as a whole or on particularsegments. For any given configuration of runwaysand taxiways in use, capacity is constant. Capac-ity varies, however, as configurations change,

Airspace Characteristics

The situation of the airfield in relation to othernearby airports and in relation to natural obstaclesand features of the built environment determines

the paths through the airspace that can be takento and from the airport. Basically, the airspacegeometry for a given airfield does not change overtime. However, when there are two or more air-ports in proximity, operations at one airport caninterfere with operations at another, causing theacceptance rate of one or both airports to sufferor requiring aircraft to fly circuitous routes toavoid conflict. In some cases, the interdependenceof approach and departure paths for nearby air-ports can force one to hold departures until ar-rivals at the other have cleared the airspace or ne-cessitate that each leave gaps in the arrival ordeparture streams to accommodate traffic at theother.

Air Traffic Control

The rules and procedures of air traffic control,intended primarily to assure safety of flight, arebasic determinants of airfield capacity and delay.The rules governing aircraft separation, runwayoccupancy, spacing of arrivals and departures,and the use of parallel or converging runways canhave an overall effect on throughput or can in-duce delays between successive operations. ATCrules and procedures have an especially impor-tant influence on capacity and delay at airfieldswhere two or three runways may be in use at thesame time or where there may be several arrivalstreams that must be merged on one final ap-proach path.

A related factor affecting delay is the noise-abatement procedures adopted by FAA and bylocal airport authorities. These usually take theform of restrictions on flight paths over noise-

Ch. 3—The Problem of Capacity and Delay 49

sensitive areas or reduction (or outright prohibi-tion) of operations during certain hours. Thesenoise-control measures can have an adverse ef-fect on capacity. For example, the runway con-figuration with the highest capacity may not beusable at certain times because it leads to unac-ceptably high noise levels in surrounding areas.Similarly, some noise-abatement procedures in-volve circuitous flight paths that may increase de-lays. The airport must thus make a tradeoff be-tween usable capacity and noise control, with theusual result being some loss of capacity or increaseof delay.

Meteorological Conditions

Airport capacity is usually highest in clearweather, when visibility is at its best. Fog, lowceilings, precipitation, strong winds, or accumula-tions of snow or ice on the runway can cut ca-pacity severely or close the airport altogether.Even a common occurrence like a wind shift candisrupt operations while traffic is rerouted to adifferent pattern; if the new pattern is not op-timum, capacity can be reduced for as long as thewind prevails. A large airport with multiple run-ways might have 30 or more possible patterns ofuse, some of which might have a substantiallylower capacity than the others.

For most airports, it is the combined effect ofweather, runway configuration, and ATC rulesand procedures that results in the most severe lossof capacity or the longest delay queues. In fact,much of the effort to reduce delays at these air-ports, through airfield management strategy andinstallation of improved technology, is aimed atminimizing the disparity between VMC and IMCcapacity. 7

Demand Characteristics

Demand—not only the number of aircraft seek-ing service, but also their performance character-

7Visual Meteorological Conditions (VMC) are those in which at-mospheric conditions permit pilots to approach, land, or take offby visual reference and to see and avoid other aircraft. InstrumentMeteorological Conditions (IMC) are those in which other aircraftcannot be seen and safe separation must be assured solely by ATCrules and procedures. Under IMC, pilots must also rely on in-struments for navigation and guidance to the runway.

istics and the manner in which they use the air-port—has an important effect on capacity anddelay. The basic relationship among demand,capacity, and delay described earlier is that asdemand approaches capacity, delays increasesharply. But, for any given level of demand, themix of aircraft with respect to speed, size, flightcharacteristics, and pilot proficiency will also de-termine the rate at which they can be handled andthe delays that might result. Mismatches of speedor size between successive aircraft in the arrivalstream, for example, can force air traffic con-trollers to increase separation, thus reducing therate at which aircraft can be cleared over the run-way threshold or off the runway.

For any given level of demand, the distributionof arrivals and departures and the extent to whichthey are bunched rather than uniformly spacedalso determines the delay that will be encountered.In part, this tendency of traffic to peak at certaintimes is a function of the nature of the flights usingthe airport. For example, at airports with a highproportion of hub-and-spoke operations, wherepassengers land at the airport only to transfer toanother flight, the traffic pattern is characterizedby closely spaced blocks of arrivals and depar-tures. Accommodating this pattern can causemuch greater delays than if arriving and depart-ing flights are spread and more uniformly in-termixed.

Photo credit Federal Av/a//on Administration

Much delay is in the terminal

50 ● Airport System Development

MEASUREMENT OF DELAY

FAA regularly collects and analyzes data ondelay, which are maintained in four data bases.8

The most extensive data base is that maintainedby the National Airspace Command Center(NASCOM). It is made up of daily reports fromcontrollers at about 60 major airports and con-tains information on the number of delays, thetime of beginning and end, and judgments by con-trollers about the primary and secondary causes.The principal value of NASCOM is that it allowsFAA to monitor general trends of delay at majorairports on a continuous basis. The subjectivenature of controller reports limits the value ofNASCOM data in analyzing the causes of delay.

The Standard Air Carrier Delay Reporting Sys-tem (SDRS) contains reports from American,Eastern, and United Air Lines on their entire sys-tems and at 32 specific airports (about 13 percentof all air carrier operations). SDRS provides dataon the flight phase where delays are incurred (taxi-out, taxi-in, at gate, and airborne), measuredagainst a standard ground time and a computer-projected flight time. The cause of delay is notreported. Like NASCOM, SDRS is used prin-cipally to monitor trends in delay on a daily basis.

The Performance Measurement System (PMS)is similar in structure to NASCOM, except thatit is maintained manually rather than on a com-puter. Delays of 15 minutes or longer are reportedby controllers at about 20 airports. A fourth de-lay monitoring system, developed by the FAA Of-fice of Systems Engineering Management (OSEM),uses data from the Civil Aeronautics Board onoperational times actually experienced by air car-rier flights. Delay is measured by OSEM as thedifference between an arbitrary standard flighttime and the actual time reported for each flight.

All of these delay measurement and reportingsystems suffer from basic faults. NASCOM andPMS are based on controller reports, and thequality and completeness of reporting vary con-siderably with controller workload. Further,NASCOM and PMS include only the longer de-lays (30 minutes or more for NASCOM, 15 min-

‘Airfield and Airspace Capacity/Delay Policy Analysis, op. cit.,pp. 32-35.

utes or more for PMS).9 Since delay is a highlyskewed distribution, measuring only the “tail” ofthe distribution produces a distorted picture of theincidence and magnitude of delay. It is impossi-ble to infer the true value of average delay fromsuch extreme statistics, and both NASCOM andPMS probably exaggerate mean delay by a sub-stantial margin.

All four FAA data bases measure delay againstthe standard of flight times published in the Offi-cial Airline Guide. This, too, probably results inan overestimation of delay since there is widevariation in the “no-delay” time from airport toairport and, at a given airport, among variousrunway configurations. Many operations, whenmeasured against a single nominal standard, arecounted as delays but are, in fact, within the nor-mal expectancy for a given airport under givencircumstances. There may also be a distortion inthe opposite direction. Most airline schedules—especially for flights into and out of busy air-ports—have a built-in allowance for delay. In partthis is simply realistic planning, but there is alsoa tendency to inflate published flight times so asto maintain a public image of on-time operation,

Finally, all the delay measuring systems incor-porate whatever delay may be experienced enroute. Delays en route may not be attributableto conditions at the airport; and including themin the total for airports probably leads to over-estimation.

While it is clear from the data that delays dooccur at many airports, it is probably true alsothat actual delay is not as great as FAA data basesindicate, either in terms of the number of aircraftdelayed or the average length of delay. The fol-lowing estimates, based on FAA data, shouldtherefore be interpreted with caution. They affordthe best available picture of the pattern of delay,

‘At the beginning of 1982, the threshold for reporting delay inthe NASCOM system was lowered to 15 minutes. While this makesthe NASCOM and PMS data bases more compatible, it preventsdirect comparison with NASCOM data from previous years whenonly delays of 30 minutes or more were reported. As a rule of thumb,FAA estimates that changing the definition of reportable delay from30 to 15 minutes increased the number of recorded delays by a fac-tor of between 2 and 3.

Ch. 3—The Problem of Capacity and Delay ● 5 1

but they almost certainly overstate the length ofaverage delay and the number of air carrier oper-ations affected. It may also be that, because someare based on subjective reports, the cause of de-lay is not correctly attributed. ’”

NASCOM data for 1976 through 1983 (table9) indicate that, through the first half of 1981,roughly 80 percent of all delays were due toweather, which either forced temporary closingof the airport or required that operations be con-ducted under Instrument Flight Rules (which usu-ally entail greater separation than under VisualFlight Rules) in order to assure safety. The nextlargest category of delay was also weather-related(weather and equipment failures), typically occur-ring when landing aids required for instrument

operations malfunction or are otherwise unavail-able at a time when visibility is reduced by rain,fog, or snow. Delays caused by traffic volume inexcess of throughput capacity typically accountedfor about 6 percent of all delays reported byNASCOM. Nearly all volume-related delays (over95 percent) were at the departure airport.

Since 1981, the pattern of causality suggestedby NASCOM data is somewhat confused by twofactors. First, the requirement for reporting de-lays to NASCOM was lowered from 30 to 15minutes. Thus, part of the sharp increase in thenumber of delays in the past 2 years is simply anartifact of the reporting procedure. FAA estimatesthat this factor alone has led to as much as a three-fold increase in the number of reported delays.A second factor contributing to more reported de-lays is the imposition of flow control proceduresby FAA, initially to cope with the effects of thestrike by air traffic controllers in August 1981 andnow to prevent overloading of certain airports atpeak periods. Flow control delays (which arevolume-related delays) accounted for over half ofall delays in 1982 and were running at slightly lessthan one-quarter of all delays for the first 6months of 1983, Flow control shifts the phase offlight where delays occur, under the rationale that

Table 9.–Air Carrier Delays Reported to NASCOM, 1976-83

Jan.-July Jan.-June1976 1977 1978 1979 1980 1981 a 1981 b 1982’ 1983C

Total delays. . . . . . . . . . . . .Percent due to:

Weather . . . . . . . . . . . . . .Equipment failures. . . . .Weather and

equipment failures . . .Runway closed for

construction . . . . . . .Traffic volumed . . . . . . . .Other causes. . . . . . . . . .Flow controle . . . . . . . . .

Total air carrieroperations (millions) . . .

Delays (per 1,000operations) . . . . . . . . . . .

36,196

764

11

153

—

9.57

3.8

39,063

832

5

324

—

9.88

3.9

52,239

797

3

353

—

10.21

5.6

61,598

843

4

342

—

10.33

6.0

57,544

784

6

345

—

9.96

5.8

-- - .- -- --- --- -- . -- --39,24/

804

5

163

—

4.94 f

7.9

95,352 322,321

46 353 1

3 1

1 13 4

45 1— 57

9.34 9.16

10.3 35.2

IUY, [81

631

3

280

23

4.85f

22.7

52 . Airport System Development—

it is less wasteful of fuel and less burdensome onthe ATC system to have delays on the ground atthe departure gate than in the air at the arrivalairport. Despite the high incidence of flow con-trol delays, the NASCOM data for 1983 indicatethat weather-related delays still accounted forabout two-thirds of all delay.ll

Table 10, based on SDRS data, shows the dis-tribution of delays by the phase of flight wherethey occur. While the average delay per flight hasremained surprisingly constant over the 7-yearperiod, the effects of flow control in 1981 and 1982are evident. Airborne arrival delays have been cutnearly in half compared with 1976-80, and taxi-out (departure) delays have been correspondinglyincreased.

Table 11, also drawn from SDRS, shows thedistribution of delay times by flight phase for atypical month in 1982. Average departure delays(gate-hold plus taxi-out) were 6.7 minutes, andaverage arrival delays (airborne plus taxi-in) were4.5 minutes. Since roughly 96 percent of all flightsencountered no delay at the gate, it can be infer-red that the principal point of delay was in thetaxi-out phase, where about one flight in five en-countered delay of 10 minutes or longer. Simi-larly, about 55 percent of delayed arrivals wereat the gate within 10 minutes of scheduled timeand 93 percent were no more than 20 minutes late,with the delay about equally distributed betweenthe airborne and taxi-in phases.

*’Some of these weather delays occur at airports where the run-way configuration is inefficient for certain combinations of wind,visibility, and precipitation. This is an airport design problem, andat certain locations it may be possible to lessen weather delays bybuilding new runways or otherwise changing the runway layout sothat the airport is less vulnerable to meteorological conditions.

Table 11 .—Distribution of SDRS Delay Time byFlight Phase, September 1982

Minutes of Percent of operations delayed by flight phase

delay Gate-hold Taxi-out Airborne Taxi-in

o . . . . . 95.7 8.7 55.8 18.21 . . . . . 0.3 8.9 7.9 27.52 0.2 11.8 7.0 22.8

3-4 : ; : : : 0.5 23.2 11.4 21.95-9 . . . . . 1.0 29.2 12.5 7.5

10-14 . . . . . 0.7 10.6 3.7 1.215-19 . . . . . 0.5 4.1 1.0 0.520-24 . . . . . 0.3 1.7 0.4 0.225-29 . . . . . 0.3 0.8 0.1 0.130-44 . . . . . 0.4 0.7 0.2 0.145-59 0.1 0.2 0.1 0

60+ . : : : : : 0.1 0.1 0 0Average delay

(min.) 0.7 6.0 2.3 2.3SOURCE: FAA Standard Delay Reporting System (SDRS)

Table 12 shows the mean delay at a sample ofbusy airports in 1982, when the average delaysystemwide was slightly less than 6 minutes peroperation. Delays at the 27 airports in the sam-ple ranged from 3.5 to 9.9 minutes per operation.The average delay at most airports was of shortduration, 7 minutes or less, as measured againstthe published schedule. Further, table 12 showsthat mean delay is roughly correlated to the levelof operations; the airports with the greatest meandelays tend to be those with the highest ratio ofactual operations to PANCAP. Thus, while de-lay affects a large number of flights at the busierairports, the average delay at these airports is rela-tively short—7 minutes or less at all but seven air-ports, which is less than 10 percent of the aver-age operating time of a flight from gate to gate.

Delay averaging, however, can be deceptive,in that it may diminish the apparent severity ofthe problem. Combining data for peak and slack

Table 10.–SDRS Trends, 1976-82

.Average delay per flight (minutes)

1976 1977 1978 1979 1980 1981 1982-

Flight phase:Gate-hold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.06 0.12 0.12 0.12 0.17 0.57 0.84Taxi-out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.46 4.51 4.78 5.06 5.10 6.00 6.25Airborne. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28 4.27 4.36 4.40 4.13 3.17 2.50Taxi-in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16 2.23 2.41 2.57 2.43 2.25 2.23

Average per flight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.96 11.13 11.67 12.15 11.83 11.99 11.91Average per operation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.48 5.57 5.84 6.08 5.92 6.00 5.96

SOURCE: FAA Standard Delay Reporting System (SDRS).

Ch. 3—The Problem of Capacity and Delay . 53

Table 12.-Delay at Selected Airports, 1982

Ratio of

Airport Mean Delay operations to

(min. per operation) Operations PANCApa Kennedy (J FK) ...................... . 9.9 312,245 1.15 la Guardia (lGA) .................... . 9.5 307,719 1.25

8.8 457,403 0.82 7.8 591,807 0.96

Dallas-Fort Worth (DFW) ............. . Chicago O'Hare (ORO) ............... . Boston (BOS) ....................... . 7.5 296,405 0.98 los Angeles (lAX) .................. . 7.2 473,470 1.06 Washington National (DCA) .......... . 7.1 304,276 1.11 Newark (EWR) ...................... . 6.9 215,026 0.77 Houston (IAH) ...................... . 6.6 338,789 1.13 Denver (DEN) ....................... . 6.4 467,508 1.32 Atlanta (ATl) ....................... . 6.2 565,584 1.20 Miami (MIA) ........................ . 6.2 349,368 0.88

6.1 328;313 1.11 B.Ob 149,134 0.51

Philadelphia (PHl) .................. . Orlando·(MCO) ....................... . San Francisco (SFO) ................ . 5.8 315,003 0.79 Detroit (DTW) ....................... . 5.7 250,481 0.53 Honolulu (HNl) ..................... . 5.5 305,992 0.58 Phoenix (PHX) ...................... . 5.3 350,995 1.06 St. louis (STl) ...................... . 5.0 289,826 1.16 Tampa (TPA) ........................ . 5.0 244,467 0.69

4.8 295,960 0.51 4.5b 296,256 0.90

Pittsburgh (PIT) ..................... . las Vegas (lAS) .................... . New Orleans (MSY) .................. . 4.4 193,504 0.70

4.1 212,287 0.64 4.1b 244,237 0.57

Seattie (SEA) ....................... . Fort lauderdale (Fll) ................ . Minneapolis-St. Paul (MSP) ........... . 3.8 265,329 0.74 Cleveland (ClE) ..................... . 3.5 208,436 0.71 apractical Annual Capacity. bAverage for 3 months only (October, November, and December 1982).

SOURCE: FAA Standard Delay Reporting System (SDRS).

periods, obscures the impact of delay at times of heavy demand. If delays at peak periods alone were examined, delay would be longer, and there would be a much greater incidence of extreme de­lays of 30 minutes or more.

Table 12 also reveals an interesting aspect of PANCAP, which is defined as the level of opera­tions that produces no more than 4 minutes aver­age delay per aircraft in the normal peak 2-hour operating period. Practical Annual Capacity does not necessarily mean that the airport cannot ac­commodate more operations or even that conges­tion has reached an intolerable level. Actual oper­ations at 10 of the airports in the sample exceeded PAN CAP by a margin of up to 32 percent with­out delay running appreciably longer than the systemwide average of 6 minutes, except for the extreme cases of Kennedy and La Guardia.

Operating experience such as this suggests that P AN CAP is an unnecessarily low measure of

practical capacity and that estimates of future capacity needs based on the ratio of actual oper­ations to PANCAP tend to be inflated. FAA itself considers P ANCAP not as a limit of acceptable delay but as a warning signal that an airport is approaching a congested condition and that ac­tion may have to be taken to increase capacity. In the National Airspace System Plan, for exam­ple, FAA's estimate of future airport capacity needs is based on 140 percent of PANCAP, i.e., when operations at an airport reach a level of 40 percent above P ANCAP, the airport is considered to have "severe airside congestion" ~a term not otherwise defined. Other sources at FAA have in­dicated that the upper limit of tolerable delay may not be reached until operations are at 190 percent of PANCAP, at which time mean delay per peak­period operation would run nearly 20 minutes. But even this may not be absolute. Tolerability is, after all, an essentially subjective judgment about the cost imposed by delay.

54 ● Airport System Development

Photo credit: U.S. Department of Transportation

Airport access is another source of delay

A related, and more general, observation is thatthe present methods of measuring capacity anddelay are not adequate. The absolute capacity ofan airport, or its parts, cannot be determined ex-cept by computer simulation or measurement ofan asymptote on a graph. The extreme conditionof unlimited demand and infinite delay can beassumed theoretically, but never observed. Thedata bases themselves are partial and highly selec-tive at best. There are virtually no published em-pirical studies of delay for all types of flights,much less delay encountered by passengers in allsegments of an air trip (travel to and from the air-port, in the terminal, and during the flight). Thus,it is difficult to quantify, except in the most gen-eral and inexact terms, the extent and severity ofairport capacity and delay problems.

Cost of Delay

A 1981 FAA study attempted to estimate thecost of delay to air carriers and the extent to whichthis cost could be avoided. ]2 FAA calculated the

total delay cost in 1980 to be about $1.4 billion,based on 5.9 minutes average delay per operationsystemwide, at a cost of $1,398 per hour. Ofthis delay, FAA estimated that about one-thirdwas attributable either to weather or to unavoid-able queuing delays at peak operating times. Sub-tracting these delays left about $904 million in po-tentially avoidable delay costs for airline operationsin 1980, or about $89 per flight.

The FAA study also calculated future delaycosts that would result if air traffic continues togrow and no remedial actions to reduce delaywere undertaken. FAA estimated that by 1991average systemwide delay would increase to 8.7minutes, with annual delay costs to airlinesreaching $2.7 billion (1980 dollars). Deductingunavoidable delays due to severe weather andqueuing, FAA estimated that $1.7 billion per yearmight be subject to control. For the average flight,the cost of unavoidable delays would rise from$89 to $125, an increase of 40 percent, but stillnot much more than the average price of one air-line ticket.

OTA finds these estimates to be reasonable, butprobably near the high end of the range. For the

Ch. 3—The Problem of Capacity and Delay ● 5 5

reasons cited above, FAA data bases tend to over-estimate delay. Because of the skewed distribu-tion of delay and the inaccuracies in the variousreporting systems used by FAA, it is difficult tofix the magnitude of the overestimate, but it maybe on the order of 25 to 50 percent. Thus, actualsystemwide 1980 delay costs may have been be-tween $0.7 billion and $1.4 billion, with theavoidable costs ranging from $0.5 billion to $0.9billion.

A second reason for treating the FAA estimateswith caution has to do with the tolerability of de-lay costs–either total costs or those defined byFAA as subject to control. The FAA report rightlypoints out that much of the avoidable delay resultsfrom airline scheduling practices. Airlines oper-ations peak in part because of public demand totravel at certain times of day. However, anotherequally important cause of peaking is airline com-petitive practice and concern about losing mar-ket share to other airlines offering service atpopular times. Airlines also concentrate arrivalsand departures of flights to capture connectingpassengers for their own airline. Presumably air-lines find the delays caused by such practicestolerable since they continue to schedule opera-tions in this way despite the cost. (Recall that allmeasures of practical capacity involve some judg-

ment about what constitutes acceptable delay. )If, for the sake of illustration, delay of more than15 minutes is assumed to be “unacceptable,” theNASCOM data for 1982 show that only about3.5 percent of flights were so delayed.

From this, one should not draw the conclusionthat delay is an insignificant problem and thatmeasures to increase airport capacity would beunwarranted. Delay is an important source of ad-ditional cost to airlines and passengers at the Na-tion’s airports, and there is legitimate reason forconcern about the future capability of airports toserve the expected increase of demand. The pointis that there is not now a systemwide capacitycrisis, nor perhaps even a crisis at the busiest aircarrier airports, if crisis means intolerable delays.FAA data show that about 98 percent of all flightsdepart or arrive within 15 minutes of schedule.

Certainly, delays are being experienced, andthey could increase as economic recovery leadsto resumption of demand growth. If this increasecannot be accommodated, the air transportationsystem will suffer. But these problems are to someextent foreseeable and they can be managed,though not entirely eliminated, by a combinationof the technological and administrative meanswhich will be examined in later chapters.

25-420 0 - 84 - 5

Chapter 4

TECHNOLOGY

Photo credit: Federa/ Aviation Administration 1

Contents

The Airport and its Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Airport and Airspace Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Guidance, Surveillance, and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Microwave Landing System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Surveillance Radar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Traffic Management Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Supporting Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Airspace Use Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Reduced Lateral Separation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Reduced Longitudinial Separation on Final Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Separate Short Runways for Small Aircraft. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weather and Atmospheric Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wake Vortex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wind Shear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Noise Control and Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Aircraft Noise.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Aircraft Operating Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Airport Surface Uilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Surveillance and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Taxiways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Apron and Gate Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Terminal Facilities and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Terminal Building Design.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Terminal Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Landside Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Terminal Curbfront . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Airport Ground Access.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Applications of Technology to Airport Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60

60

626266687 0

71717476

767 77 7

798 081

8 38 38 48 68 6889 0

9 39 59 6

9 7Capacity and Delay Problems at Selected Airports . ..............................100Prospective Technological Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .,. ...........101

List of Tables

Table Page13. Technology To Increase Airport Capacity and Reduce Delay . . . . . . . . . . . . . . . . . . . . . 6314. Summary of NAS Plan Benefits and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69IS. Airport Capacity Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............10216. Airport Technology Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................104

List of Figures

Figure Pagey. Airport Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618. Comparison of Microwave Landing System and Instrument Landing System . . . . . . . 659. Arrival and Departure Separations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

10, Effects of Low-Altitude Wind Shear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7811. Airport Landside Functional Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8712. Airport Terminal Design Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893.3. Federal Capital Funding of Airports and Related Facilities . . . . . . . . . . . . . . . . . . . . . . . . 9514. Zurich Airport and Rail Terminal Complex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9815. Off-Site passenger Terminal Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Chapter 4

TECHNOLOGY’

The airport system in place in the United Statestoday is extensive and highly developed; in gen-eral, it serves the Nation well. Still, there areproblems of congestion and delay at the busiestairports, where facilities are not adequate to ac-commodate demand at all times and in all condi-tions of weather and visibility. The Federal Avia-tion Administration (FAA) forecasts that growthof commercial and private aviation could be con-strained by lack of airport capacity, which it con-siders to be the most serious problem facing civilaviation through the remainder of this century. z

Recent policy statements by FAA acknowledgethat, with a few exceptions, the direct solutionof building new airports and expanding existingones may not be practical due to lack of suitablenew airport sites, physical limitations of presentfacilities, and concerns about environmental im-pacts of aviation on surrounding communities.3

Similar views have been expressed in two recentstudies of airport capacity,4 5 and there is a widelyheld opinion that, while the airport system is ex-pandable in the broad sense, there is little hopeof creating major new facilities in those key metro-politan areas where air travel demand and avia-tion activity continue to outstrip available airportcapacity unless airport planners can persuade sur-rounding communities that airports can be goodneighbors.

For this reason, the aviation community andFAA have sought technological solutions that will

IThis chapter is based on material prepared for OTA by Landrum& Brown, Inc.

‘National Airspace System Plan, revised edition (Washington, DC:Federal Aviation Administration, April 1983), p. 11-10.

31bid., p. I-5.4Report of the Industry Task Force on Airport Capacity Improve-

rnent and Delay Reduction (Washington, DC: Airport OperatorsCouncil International, September 1982).

5Report and Recommendations of the Airport Access Task Force(Washington, DC: Civil Aeronautics Board, March 1983).

ease congestion by allowing fuller and more effi-cient use of the airports we already have. Thistechnology includes new equipment for surveil-lance, navigation, and communication and revisedprocedures for using the airspace and airport fa-cilities. In this way, it is hoped that additional de-mand can be absorbed within the infrastructurenow in place, without adversely affecting sur-rounding communities.

This chapter examines technological measures,either currently available or under development,that could be employed to relieve congestion anddelay. It consists of a survey of possible improve-ments in airport technology, with emphasis on thecircumstances in which this technology would beapplicable, the extent to which it could increasethe amount of traffic handled, and the prospectsfor development and deployment over the com-ing years.

In aviation, the term technology typically bringsto mind sophisticated electronic and mechanicaldevices used for navigation, surveillance, com-munication, and flight control. Such devices areclearly of interest, but for the purposes of this re-port, technology is interpreted in a broader sense.As used here, technology refers not only to newdevices and equipment but also to new opera-tional concepts and procedures that they makepossible. Also, many in the aviation communitydraw a distinction between technology (meaningequipment and sometimes procedures) and civilengineering (referring to the design and construc-tion of physical components of the airport—theconcrete, so to speak). While recognizing that dif-ferent engineering disciplines and techniques areinvolved, this report does not make such a ciistinc-tion and considers the design and construction ofimproved physical components such as runways,taxiways, and terminal buildings as simply onemore form of technology that will add to airportcapacity or permit more effective and economi-cal use of the airport as a whole.

59

—.

60 . Airport System Development— — . —

THE AIRPORT AND ITS COMPONENTS

The airport is a complex transportation hubserving aircraft, passengers, cargo, and surfacevehicles. It is customary to classify the severalcomponents of an airport in three major catego-ries: airside facilities; landside facilities; and theterminal building, which serves as the interchangebetween the two’ (see fig. 7).

Airside components, sometimes called the aero-nautical surfaces, or more simply the airfield, arethose on which aircraft operate. Principally, theyare the runways where aircraft take off and land,the taxiways used for movement between the run-way and the terminal, and the apron and gateareas where passengers embark and debark andwhere aircraft are parked. Because the airspacecontaining the approach and departure paths forthe airfield has an important effect on runway uti-lization, it is also customary to include terminalarea airspace as part of the airside.

The terminal consists primarily of the buildingsserving passengers and is made up of passengerloading and waiting areas, ticket counters, bag-— — —

6 Some experts do not employ this tripartite classification. For ex-ample, R. Horonjeff and F. X. McKelvey, Planning and Design ofAirports (New York: McGraw Hill, 3d cd., 1983), distinguish onlybetween the airside and the landside, making the division at thepassenger loading gates and including the terminal as part of thelandside.

gage handling facilities, restaurants, shops, carrental facilities, and the like. Loading, handling,and storage areas for air cargo and mail, oftenseparately located, are also part of the terminalcomplex.

The landside is essentially that part of the air-port devoted to surface transportation. It beginsat the curbside of the terminal building and in-cludes roadways, parking facilities, and—in somecases—rail rapid transit lines and stations that arepart of a larger urban mass transit system. Cus-tomarily, only roadways and transportation fa-cilities on the airport property are considered partof the landside, even though they are actually ex-tensions of, and integral with, the urban and re-gional transportation network.

In the discussion that follows, attention is fo-cused initially on those airside components wherecapacity and delay problems tend to be severe.The landside and terminal areas are not trouble-free, however, and congestion of these facilitiescan have an important effect on the overall ca-pacity of the airport. An examination of possi-ble technological improvements in terminals andlandside access is included at the end of thischapter.

AIRPORT AND AIRSPACE TECHNOLOGY

Technological approaches to expanding airportcapacity or reducing delay fall into three broadcategories. First, there are improved devices andprocedures that will expedite the flow of air traf-fic into and out of the airport—i.e., techniquesthat will augment airside capacity or mitigate air-craft delay by increasing the runway operationrate. The second category includes techniques tofacilitate movement of aircraft on the airport sur-face. The purpose of these technologies is to moveaircraft from the runway to the passenger loadinggates and back again as expeditiously as possi-ble, thereby shortening the taxi-in and taxi-outcomponents of delay and easing congestion ontaxiways, aprons, and loading ramps. The thirdcategory embraces techniques that can be used toaid the transit of passengers through the terminal

building and the flow of vehicles on airport cir-culation and access roads. In contrast with the firsttwo categories, where the aim is to alleviate air-craft delay, the third category is intended to fa-cilitate the movement of people and to reduce thatpart of delay incurred in getting to and fromaircraft.

Thus, the survey that follows addresses thebroad question of airport capacity, not just air-side capacity or aircraft delay. The intent is toexamine ways to improve the overall adequacyand efficiency of the airport as a transportationhub. The underlying proposition is that delay–any form of delay—ultimately affects the passen-ger through loss of time and increased cost of airtransportation service. In this sense, it is parochial

Ch. 4—Techno/ogy ● 61

///////////t

Figure 7.—Airport Components

SOURCE Federal Avlatlon Admlnlstratlon

I I

I .'

I I

I I

I

62 Airport System Development

to speak only of aircraft delay since the basic pur-pose of the air transportation system is to movepeople from origin to destination, in safety, withminimum expenditure of time and money. Allmeasures taken at airports to shorten travel time,to lower travel cost, or to lessen inconvenienceare of equal importance, regardless of whetherthey apply to the airside, the landside, or passagethrough the terminal.

The scheme of organization for this survey isoutlined in table 13, which lists various forms of

technological improvements and identifies thearea of the airport where they could be appliedand the purpose they could achieve. Discussionof specific technologies listed in table 13 is pre-sented in the sections that follow, which make upthe bulk of this chapter. In the concluding partof the chapter is a survey of the capacity and de-lay problems at a representative sample of airportsand a tabulation of possible forms of technologi-cal relief.

GUIDANCE, SURVEILLANCE, AND CONTROL

The position and spacing of aircraft in the air-borne traffic stream is a key factor in determin-ing airfield capacity. For the pilot, it is vital toknow where the aircraft is in relation to the run-way and the airspace corridors around the air-port. This is accomplished by ground-based navi-gation equipment and airborne receivers. The airtraffic controller uses surveillance radar to mon-itor the position of the aircraft on approach anddeparture paths and in relation to other aircraftusing the airport. The success of these activities—navigation by the pilot and surveillance by thecontroller—is affected by the inherent accuracyof the equipment used. (Is the aircraft in factwhere the pilot and controller think it is?) Thedata update rate is also important. (How recentis this information and what may have happenedsince the last position reading?)7

In conditions of good visibility, when visualcues can be used by the pilot to confirm the posi-tion of the aircraft and to supplement guidancesystems, the spacing between aircraft can be re-duced to the minimum permitted by safe operat-ing procedures. When visibility is lessened bydarkness, rain, or fog, the pilot must rely on in-struments and the controller on radar. In such cir-cumstances, a margin of safety must be added tothe interval between aircraft, in effect increasingthe time that must be allowed for each to use— . . —

‘To appreciate the magnitude of this uncertainty, consider thatat typical jet approach speeds, an aircraft can travel almost 1,000ft horizontally and descend 50 to 60 ft in the 4 seconds between suc-cessive scans of the radar presently used for air traffic control atairports.

an assigned portion of the airspace or to occupythe runway, and correspondingly lowering thethroughput rate. If the accuracy of navigation andsurveillance devices could be improved, the ca-pacity of the airfield under Instrument Meteoro-logical Conditions (IMC) could be closer to thatattainable under Visual Meteorological Condi-tions (VMC).

Three technologies that could improve aircraftguidance, surveillance, and control are plannedfor deployment in the next few years. They arethe Microwave Landing System, improved sur-veillance radar, and automated traffic-manage-ment systems for the air traffic controller.

Microwave Landing System

The guidance system for approach and land-ing now in use is the Instrument Landing System(ILS), which has been the standard system in thiscountry since 1941 and is widely used by civilaviation throughout the world. ILS provides guid-ance by radio beams that define a straight-linepath to the runway at a fixed slope of approx-imately 30 and extending 5 to 7 miles from therunway threshold. All aircraft approaching theairport under ILS guidance must follow this pathin single file, spaced at intervals dictated by stand-ards for safe longitudinal separation and the needto avoid wake vortex. This long, straight-in ap-proach is a bottleneck that reduces the runwayutilization rate, especially when fast and slow air-craft are mixed in the approach stream or whenarrivals from different directions must be merged

Ch. 4—Technology . 63

Table 13.–Technology To Increase Airport Capacity and Reduce Delay

Area ofapplicationTechnology

Aircraft guidance, surveillance, and control:Microwave Landing System . . . . . . . . . . . . . . . .

Purpose Benefit

Improve precision ofnavigation; make moreflexible use of airspace

Improve surveillance; reduceseparation

Improve traffic flow

Increased capacity; reduceddelay; less noise impact

Airspace

Surveillance radar . . . . . . . . . . . . . . . . . . . . . . . . Airspace

Airspace

Improved safety; increasedcapacity

Reduced delayTraffic management techniques . . . . . . . . . . . .

Airspace use procedures:Reduced lateral separation for parallel and

converging runways Airspace

AirspaceAirspace

Increase utilization of multiplerunways in IMC

Reduce in-trail separationSegregate air traffic by size

and speed

Increased capacity

Reduced longitudinal separation . . . . . . . . . . .Separate short runways for small aircraft . . . .

Increased capacityIncreased capacity; reduced

delay

Weather and atmospheric effects:Wake vortex detection . . . . . . . . . . . . . . . . . . . .Wind shear detection . . . . . . . . . . . . . . . . . . . . .

AirspaceAirspace

Reduce in-trail separationAlert pilots to wind shear

Increased capacityImproved safety; reduced

delay

Noise control and abatement:Control of aircraft noise . . . . . . . . . . . . . . . . . . . Reduce aircraft noise Increased capacity; reduced

delayIncreased capacity: reduced

delay

Airspace

AirspaceAircraft operating procedures . . . . . . . . . . . . . . Lessen or distribute noiseimpacts

Airport surface utilization:Surveillance and control . . . . . . . . . . . . . . . . . . . Taxi ways Improve surveillance, control,

and guidance of aircrafton ground

Reduce runway occupancytime

Increase efficiency of taxiwayuse

Improve docking at gate;improve aircraftmaintenance and servicing

Increased capacity; reduceddelav; improved safety

High-speed turnoffs and improved taxiways. .

Taxiway marking and lighting . . . . . . . . . . . . . .

Apron and gate facilities . . . . . . . . . . . . . . . . . .

Runway

Taxi ways

Ramps andaprons

Increased capacity

Reduced delay

Increased capacity; reduceddelay

Terminal facilities and services:Terminal building design . . . . . . . . . . . . . . . . . . Terminal

Terminal

Increase utility and efficiencyof terminal building

Improve circulation interminal; reduce walkingdistance

Expedite ticket purchase andpassenger check-in

Expedite baggage check-in,transfer, and pickup

Make screening faster andmore reliable

Expedite customs andimmigration clearance

Increased capacity; reduceddelay

Reduced delay; greaterpassenger convenience

Passenger movers . . . . . . . . . . . . . . . . . . . . . . . .

Ticketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Terminal

Terminal

Terminal

Terminal

Reduced delay

Reduced delay

Reduced delay;security

Reduced delay

Reduced delay

Reduced delay

Reduced delay

Baggage handling . . . . . . . . . . . . . . . . . . . . . . . .

Passenger security screening . . . . . . . . . . . . . . improved

Federal Inspection Service . . . . . . . . . . . . . . . .

Airport access:Terminal curbfront design . . . . . . . . . . . . . . . . . Terminal;

landsideLandside

Land side

Facilitate airport entranceand exit

Facilitate automobile trafficflow

Reduce access time; lessen

Airport circulation roads . . . . . . . . . . . . . . . . . .

Airport ground access . . . . . . . . . . . . . . . . . . . .road congestion

SOURCE Office of Technology Assessment

64 ● Airport System Development— . . — . — — — — .

on the common final approach path. As a result,the capacity of the airfield under IMC, when thelong ILS common approach path must be used,is usually less than under VMC.

The runway utilization rate under IMC couldcome closer to that attainable under VMC if air-craft could follow multiple approach paths, de-scend at different approach angles, or aim at dif-ferent touchdown points on the runway—noneof which is practical with ILS. If this flexibilitywere possible, as it is under VMC, airfield capa-city would be less affected by weather conditions,and throughput would be governed almost ex-clusively by runway geometry and aircraft per-formance characteristics.

The Microwave Landing System (MLS), whichhas been under development by FAA for over adecade, would overcome some of the disadvan-tages inherent in the ILS. Because MLS uses abeam that scans a wide volume of airspace, ratherthan the pencil beam of ILS, it permits aircraftto fly any of several approach angles (includingtwo-step glide slopes) and, in the horizontal plane,to approach along curving paths that intersect theextension of the runway centerline at any chosenpoint. In effect, MLS offers a degree of freedomin using the airspace that is closer to that enjoyedunder conditions of good visibility (see fig. 8).

The chief motive for FAA in seeking to developand deploy the MLS is not the potential capacitybenefits, however, but its operational advantages—more precise guidance, ease of installation, im-proved reliability, less susceptibility to electro-magnetic interference, and greater number oftransmission channels. The capacity benefits aresecondary but still of great importance at someairports where the present ILS acts to constraincapacity in adverse weather conditions. In termsof its effect on capacity, the chief advantage ofMLS is that, in IMC, it allows pilots and con-trollers greater flexibility in selecting an approachpath so as to shorten the approach time, to avoidair turbulence generated in the wake of precedingaircraft, or to avoid noise-sensitive areas. Anotheradvantage is that MLS can provide guidance forthe aircraft during missed approach, allowing asafe exit from the terminal airspace and smoothreentry into the approach pattern. The availabil-

ity of missed approach guidance could have a sig-nificant capacity benefit at those airports with par-allel or converging runways that cannot now beused in IMC. A third advantage is that MLS canbe installed on runways where ILS is not possi-ble due to siting problems and on short auxiliaryrunways reserved for commuter and small gen-eral aviation (GA) aircraft.8 On some runways,MLS can increase capacity during IMC by pro-viding lower landing minimums than ILS andthereby allowing the airport to remain open inmarginal weather conditions. A fourth advantageof MLS is its capability to provide nonconflictingroutes into closely situated airports, where ap-proach or departure paths may mutually interfereand limit capacity utilization.

The capacity benefits of MLS are highly site-specific—depending on the runway configuration,the prevalence of adverse weather, the mix of air-craft using the airport, and the extent to whichthese aircraft are equipped with MLS receivers.Estimates by FAA indicate that the benefits couldrange up to 10 or 15 percent greater capacity atsome airports under IMC. The overall effects oncapacity at these airports would be somewhatsmaller since they depend on how often Instru-ment Meteorological Conditions occur. The neteconomic benefits are estimated by FAA to be$500 million over a 20-year period (1976 dollars),principally to air carriers and commuter airlinesin the form of reduced delay costs and savingsof passenger time.9

This estimate has been challenged in a recentreport by the Industry Task Force on Airport Ca-pacity Improvement and Delay Reduction. TheTask Force found that the chief advantages wereat small or remote airports served by helicoptersand commuter airlines and in high-density traf-fic areas where MLS could permit commuter air-craft to approach and land on separate short run-

6For a further discussion of MLS technology and its benefits, seeAirport and Air Traffic Control System (Washington, DC: U.S. Con-gress, Office of Technology Assessment, OTA-STI-175, January1982), pp. 92-96, 117; and Improving the Air Traffic Control System:An Assessment of the National Airspace System Plan (Washington,DC: Congressional Budget Office, August 1983), pp. 9-18.

‘An Analysis of the Requirements for, and the Benefits and Costsof the National Microwave Landing System (MLS), FAA-EM-80-7(Washington, DC: Federal Aviation Administration, June 1980).

Ch. 4—Technology ● 6 5

Figure 8.—Comparison of Microwave Landing System and Instrument Landing System

4 0- wide t W “(

Instrument landing system

No continuous distancemeasurement two discrete range Aindications provided by fan markers A

\* .

Outer

k ~

marker

Middle

Extended

I

— — \

SOURCE: Federal Aviation Administration

ways. 10 The direct benefits to major air carriers procedures that have not yet been tested andare much less clear, according to the Task Force, proven in an operational environment .11because they depend on use of curved or seg- -

FAA is now proceeding with MLS implemen-mented approaches and multiple glide paths— tation. A contract for production and installationof 172 units was let in late 1983, with follow-on

66 . Airport System Development

procurements planned for 1985-95 (900 units) and1996-2000 (350 units), making a total of approx-imately 1,425 installations by the beginning of thenext century. Priority will be given to large andmedium hub airports and to those airports nowlacking ILS because of siting restrictions or lackof available transmission channels.12 FAA esti-mates the total cost of ground equipment to be$1.33 billion. User costs for MLS receivers are esti-mated to be an additional $1.63 billion, bringingthe total cost for full deployment of MLS to nearly$3 billion over the coming 20 years.13 14

Replacement of the existing ILS poses two prob-lems that may complicate the transition to MLSand delay realization of the full benefits. Thereare at present about 650 ILS units in commissionat some 460 airports and another 150 or so unitsin various stages of procurement—some as re-placements for existing units, others as new in-stallations. The MLS transition plan calls for theseILS units to remain in service for many years tocome, until at least 60 percent of the aircraftroutinely using the ILS/MLS runway are equippedwith MLS. While ILS and MLS can be colocatedand operated simultaneously without signal in-terference, there may be procedural difficulties inblending aircraft equipped with ILS (and there-fore capable of only straight-in approaches) intoa traffic stream with MLS-equipped aircraft fly-ing curved or segmented approaches. Thus, thefull capacity benefits of MLS may not be attain-able at a given airport until all or nearly all air-craft are MLS-equipped and the ILS can be decom-missioned.

A second factor that may delay taking fulladvantage of MLS at specific sites is the agree-ment with the International Civil Aviation Orga-nization whereby the United States is committedto retaining ILS service at international gatewayairports until 1995. There are 75 such airports,— — . —

12 The aviation industry has voiced strong opposition to the Pro-posal for installing MLS at large and medium airports first, and inMay 1984 FAA agreed to a complete review of the deploymentstrategy. Depending on the outcome of this review, the early stagesof the MLS program schedule might be set back a year or more.

13 Microwave Landing System Transition Plan, APO-81-1 (Wash-ington, DC: Federal Aviation Administration, May 1981).

14 Preliminary Analysis of the Benefits and Costs TO Implement

the National Airspace System Plan, DO~/~AAIEM-82-2?2(Washington, DC: Federal Aviation Administration, June 1982).

generally the busiest U.S. airports and those mostprone to capacity and delay problems. RetainingILS service at these airports may influence someusers to defer purchasing MLS equipment foranother 10 years or more.

While the capacity gains attributable to MLSmay be rather small for the airport system as awhole, MLS does appear to offer promise at thoseairports where it could be used to create a moreflexible traffic pattern or to provide commuter andsmall GA aircraft access to an alternate runwayin IMC, thereby relieving pressure on the mainrunway used by large air carrier aircraft. Beyondthese direct benefits, moreover, MLS may permitprocedural changes that could also increase ca-pacity or reduce delay. These potential benefitsof MLS are discussed in a later section on airspaceuse procedures.

Surveillance Radar

Surveillance is accomplished by radar and asso-ciated electronic and computer systems that locate,identify, and display the position of aircraft in theairspace. In terminal areas, two types of radar arepresently used for this purpose: search radar(technically termed “primary radar”) and the ra-dar beacon system (sometimes called “secondaryradar”). Search radar emits signals and displaysthe returns reflected from the body of the aircraft,objects on the ground, and precipitation or weatherfronts, thereby providing a basic two-dimensionalmap of the airspace. The beacon system, knownas the Air Traffic Control Radar Beacon Systemor ATCRBS, displays only replies from aircraftequipped with electronic devices, called trans-ponders, that send out a coded signal when in-terrogated by the radar beacon. This signal in-dicates not only the position of the aircraft butalso its identity (flight number) and altitude (ifthe aircraft is equipped with an altitude-encodingtransponder). The beacon system is presently themain source of surveillance information for airtraffic control (ATC).

This radar-derived information is correlatedand presented to the air traffic controller on oneof four different types of display systems: TPX-42, ARTS II, ARTS III, or ARTS 111A. The TPX-42 is the least sophisticated equipment. It is a non-

Ch. 4—Technology ● 6 7

programmable device that correlates and displayssearch radar data and beacon returns on each suc-cessive sweep of the antenna. The TPX-42 is usedat airports with little traffic. The Automated Ra-dar Terminal System (ARTS II) is a program-mable data processor that displays primary andsecondary radar data on the controller’s scope butdoes not track aircraft or predict their position.It is used at airports with low to medium levelsof activity.

ARTS III detects, tracks, and predicts the posi-tion of aircraft. This information is presented onthe controller’s display as computer-generatedsymbols (denoting altitude, ground speed, andidentity) positioned alongside the secondary ra-dar return. ARTS 111 also incorporates featuresthat alert the controller when aircraft descendbelow minimum safe altitude or when two air-craft are approaching too closely and require ac-tion to assure safe separation—a feature knownas conflict alert. ARTS 111A is a refinement ofARTS 111 that is capable of tracking aircraft de-tected by search radar alone—i.e., aircraft notequipped with an ATCRBS transponder. ARTS111 and ARTS 111A equipment is installed at the62 busiest air traffic hubs.

FAA is now in the process of replacing muchof the primary radar and display equipment. Theexisting primary surveillance radars used at air-ports (ASR-4, ASR-5, and ASR-6) are based onvacuum tube technology that suffers from relia-bility problems and maintenance difficulties.Newer solid-state equipment (ASR-7 and ASR-8) has been installed at some locations, but theseradars, like earlier versions of ASR, are adverselyaffected by ground clutter, false targets generatedby flocks of birds, propagation anomalies, andmasking of aircraft returns by weather. Of theseshortcomings, weather masking is perhaps themost severe operational problem. The strong re-turn from storms conceals the weaker return fromaircraft detected on primary radar alone. To com-pensate, controllers alter the polarization of theradar to reduce weather echoes and make the air-craft return stand out more clearly, but this lessensthe apparent severity of weather fronts and pre-cipitation.

Between 1986 and 1990, FAA plans to installa new primary radar system (ASR-9) which willhave a separate weather channel allowing the con-troller to assess the severity of storms while re-taining the ability to detect small aircraft with-out transponders. The ASR-9 will also incorporatean improvement called Moving Target Detectionto overcome the problems of ground clutter andspurious targets. These improvements in primaryradar information, when coupled with the pres-ent radar beacon display, will provide the con-troller with a clearer and more accurate pictureof the airspace—thereby lessening workload andcreating a better basis for decisionmaking aboutaircraft movement around the airport. The esti-mated cost of installing 105 ASR-9 systems is $480million, with the option of adding 35 more in the1990s at a cost of roughly $125 million.ls

As radar systems are being upgraded, FAA alsoplans to improve the data processing and displayequipment used by air traffic controllers. Initially,the TP)(-42 system will be replaced by a new ver-sion of ARTS II, designated ARTS 11A, which willincorporate minimum safe altitude warning andconflict alert features like the present ARTS III.The ARTS III equipment will also be enhancedwith greater memory to handle heavier trafficloads and improved software that will reduce thenumber of false conflict alerts. In the period 1990-95, ARTS II and III will be replaced by new dataprocessing and display consoles, called sectorsuites, that will provide improved presentationof surveillance and weather data, display of traf-fic management and planning information, andautomated assistance to the controller in sep-arating and routing traffic in terminal airspace.lb

The immediate capacity benefit of the ASR-9radars will be surveillance information of im-proved reliability and accuracy, which will pro-vide the controller with a better picture of theairspace situation. Of even greater importance,the improved ASR-9 radar, the upgraded ARTSII and III, and the eventual installation of new sec-tor suites will support changes in traffic manage-ment techniques that will help the controller make

—

68 . Airport System Development

more efficient use of the airspace. These prospectsare discussed next.

Traffic Management Techniques

A major task of the air traffic controller is man-agement of traffic so as to maintain a smooth flowof aircraft to and from the airport with minimumdelay. This is done by the techniques of meter-ing, sequencing, and spacing.17 With current tech-nology, these are largely matters of controller artthat depend heavily on the individual’s skill andexperience. On a typical day, the controller mustmake literally hundreds of related decisions aboutthe order and timing of aircraft movements in thetraffic pattern under the prevailing conditions ofwind and weather. The chief problems that thecontroller must deal with in performing theseactivities are randomness in the arrival and depar-ture streams and differences in the speed and flightcharacteristics of successive aircraft using theairspace. The extent to which the controller is suc-cessful in applying the techniques of traffic man-agement has a significant influence on delay andefficient use of airport capacity.

It has long been recognized by ATC experts thatthe key to more effective traffic management,especially in circumstances of heavy demand, isto involve computers in the decisionmaking proc-ess. In some instances, this means providing thecontroller with computerized aids to decision-making—devices to collect, integrate, and displayinformation that will give a better picture of thetraffic situation and help in executing a controlstrategy. In other instances—particularly wheredecisionmaking is routine, repetitive, and reduc-ible to unambiguous rules—the approach is tosubstitute the computer for the human operator,thus relieving him of workload and guardingagainst human error and inconsistency.

As part of the planned modernization of theATC system, FAA is developing new softwarepackages that will assist in traffic management

17’ Metering is regulating the arrival time of aircraft in the terminal

area so as not to exceed a given acceptance rate. Sequencing entailsspecifying the exact order in which aircraft will take off or land.Spacing involves establishing and maintaining the appropriate in-terval between successive aircraft, as dictated by considerations ofsafety, uniformity of traffic flow, and efficiency of runway use.

at and around airports. Known under the collec-tive designation of Traffic Management System(TMS),18 this new software will perform severalimportant functions to increase the efficiency ofairport and airspace utilization: airspace con-figuration management, dynamic planning andcomputation of acceptance rate, tactical execu-tion of control strategy, runway configurationmanagement, and departure flow metering.

For incoming flights, TMS will establish anacceptance rate and order of landing based on esti-mated arrival time and predetermined flight paths.As aircraft progress toward the runway, TMS willadjust landing time and spacing between aircraftas necessary to eliminate gaps or surges in the traf-fic stream and to make efficient use of airspaceand runways. In the earlier stages of implemen-tation, the computer will generate recommendedinstructions and command messages for the con-troller to relay to pilots by voice radio. In laterstages, the computer will transmit commandsdirectly to individual aircraft by the Mode S datalink.19

Photo credit: Federal Aviation Administration

Traffic management can smooth the flow

Ch. 4—Techno/ogy ● 6 9

Other components of TMS will contribute tomore efficient traffic management in other ways.Runway configuration management, a softwareprogram that has been under development at Chi-cago O’Hare since 1980, will assist controllers inestablishing the most efficient combination of ar-rival and departure runways for given conditionsof weather and demand. Departure flow meter-ing will help assure an appropriate blend of take-offs and landings and will feed aircraft out of theterminal area and into en route airspace.

FAA plans do not call for implementation ofTMS all at once, nor at all airports. The compo-nents are being developed separately and will betested and put in place as ready and where needed.The overall timetable is contingent on the devel-opment and installation of new computers andsector suites in terminal area control centers andon the development of companion software pack-ages for the en route ATC system—the AdvancedEn Route Automation (AERA) program. Full im-plementation of TMS, AERA, and related tech-nological changes will not occur until 1995 orlater.

TMS and AERA are tied together because FAA’slong-term response to air traffic growth involvesa general application of the flow management con-cept so as to provide strategic and tactical plan-ning, continuous performance monitoring, andflexible and adaptive exercise of control for theairspace as a whole. For example, en route meter-ing—which is a feature of AERA-will contrib-ute to efficient runway use by treating all arrivalsalong all routes as a single traffic pattern and ad-justing in-trail separation so as to achieve a steady

rate of delivery into the terminal area. The pres-ent method of flow management, which uses uni-form, preestablished in-trail separation, can re-sult in inefficient runway utilization (surges andgaps in the traffic flow) because it cannot adaptreadily when flow along arrival routes does notexactly match the nominal rate used as the basisfor selecting in-trail spacing.

The capacity benefits of TMS are difficult toestimate on a systemwide basis. The anticipatedbenefits are highly specific to conditions at the air-port site and particular patterns of demand. Fur-ther, it is not always possible to distinguish be-tween the benefits of TMS and those that wouldresult from other planned improvements in theATC system. Estimates published by FAA as partof an analysis of overall benefits and costs of theNational Airspace System Plan (NAS Plan) sug-gest that the benefits arising from improved traf-fic management and flow planning in terminalareas could be fuel savings on the order of 0.75to 1.25 percent. FAA calculates the value of thesesavings to be between $165 million and $280 mil-lion per year (1982 dollars) for the period 1993-2005. Of these savings, about 60 percent wouldaccrue to air carriers, with the remainder aboutequally distributed between business and privategeneral aviation.20

The FAA report does not provide a projectedcost for TMS alone, but lumps these costs withthose of AERA and other airport and airspaceprograms in the NAS Plan (see table 14). The total

Table 14.-Summary of NAS Plan Benefits and Costs (billions, 1982 dollars)

20-year totals Present (discounted) valuesa

Benefits costs Net Benefits costs Net

70 Airport System Development

costs are estimated to be $12 billion ($4 billionto aviation users and $8 billion to FAA) over thenext 20 years; the associated 20-year benefits arecalculated to be $24.7 billion to users, primarilyin fuel savings attributable to AERA and $24.3billion to FAA in operating cost savings. (All esti-mates in 1982 dollars. )

Supporting Technologies

In addition to programs aimed specifically atreducing delay and increasing the throughput ofmajor airports, FAA is pursuing other technologi-cal developments that will either facilitate theATC process or provide greater assurance ofsafety. Three particularly important developmentsof this sort are the Mode S data link, the CockpitDisplay of Terminal Information (CDTI), and theTraffic Alert and Collision Avoidance System(TCAS). These technologies will not, by them-selves, provide relief to the problems of conges-tion and delay in terminal areas, but they couldmake possible other technological improvementsor procedural changes to improve the flow oftraffic.21

The addition of Mode S to the present ATCRBStransponder has perhaps the most far-reaching im-plications for air traffic control. Mode S will allowthe air traffic controller to interrogate aircraft in-dividually and will make possible direct and selec-tive two-way digital communication between airand ground. Mode S thus will form the basis forthe more automated forms of air traffic controlenvisioned in the TMS and AERA programs.Equally important, Mode S will open up a new,high-capacity channel of communication that willprovide more complete and rapid exchange of in-formation and greatly reduce controller and air-crew workload by relieving them of the time-consuming process of transmitting, receiving, andacknowledging messages by voice radio. A thirdbenefit of Mode S is that it can enhance the sur-veillance function by reducing interference amongtransponder replies of aircraft operating close to-gether in terminal airspace.

An important potential application of the ModeS data link is that it could be used to improve the— — . —

“See Airport and Air Traffic Control System, op. cit., for moredetailed discussion of these technologies.

quantity and quality of information available inthe cockpit by providing a display of traffic inthe surrounding airspace. This display, CDTI, hasbeen under development for several years and hasbeen recommended by pilots and ATC experts asa valuable new tool to enhance safety and to aidmaneuver in terminal airspace. The CDTI, byshowing the location and path of nearby aircraft,could give the pilot an overall view of the trafficpattern and could provide an additional sourceof information under conditions of reduced visi-bility.

The CDTI is not envisioned as a substitute forground-based air traffic control nor as the basisfor independent maneuver to avoid collision orto assure safe separation. Rather, it is intendedas a supplemental display that will allow the pilotto “read” the air traffic pattern and to cooperatemore effectively and confidently with the ground-based controller in congested airspace. FAA, incooperation with the National Aeronautics andSpace Administration (NASA), is currently ex-ploring roles for a CDTI. The focus of this effortis to develop CDTI system requirements and todetermine the compatibility of these requirementswith Mode S and TCAS data sources.

The overriding concern in seeking ways to in-crease airport throughput and runway acceptancerates is maintaining safe separation among air-craft. Basic separation assurance is provided intwo ways: by application of the “see-and-avoid”principle in Visual Flight Rules (VFR) and by ATCprocedures and ground-based surveillance in In-strument Flight Rules (IFR). Pilots and others con-cerned with aviation safety have long advocatedadditional assurance in the form of an airborne(i.e., ground-independent) collision avoidancesystem. The system currently proposed by F&l—Traffic Alert and Collision Avoidance System—isan independent airborne device designed to useATCRBS (or Mode S) transponder informationfor generating a warning to the pilot that an ap-proaching aircraft is a threat and that evasive ma-neuver may be called for.

TCAS is in the development stage at presentand may not be ready for operational use untilthe late 1980s. The availability of TCAS, or anequivalent system of airborne collision avoidance,

Ch. 4—Techno/ogy . 71

will be an important factor in the decision toadopt revised procedures for increasing the effi-ciency of airspace use. Without assurance that safeseparation can be maintained and that there is a

backup to ground-based air traffic control, nei-ther airspace users nor FAA are likely to have theconfidence to proceed with revision of presentlongitudinal and horizontal separation standards.

AIRSPACE USE PROCEDURES

Procedures governing the use of terminal air-space and airport runways, which are designedprimarily to assure safety, sometimes slow ordisrupt the flow of traffic. In general, these pro-cedures consist of rules and standards pertainingto the permissible distances between aircraft invarious weather conditions and approach pat-terns. Actually, there are two sets of procedures:one for use in Visual Meteorological Conditions(VMC) and another, more stringent, set for usein Instrument Meteorological Conditions (IMC).Instrument Flight Rules —which are largely deter-mined by available navigation, communication,and surveillance technology—often cause delaysat busy airports because of the increased separa-tion standards and special safeguards that mustbe applied in restricted visibility.

There is a widely held, but not unanimous,view among airspace users that revisions of theexisting instrument flight procedures are practicaland that they would be warranted in the interestof reducing delay. While these revisions are some-times spoken of as capacity improvements, theywould not in most cases actually increase the ca-pacity of airports. Instead, they would allow ex-isting capacity to be used more fully or withgreater efficiency and would bring the through-put attainable under IMC closer to that whichprevails under VMC.

In response to urging from airspace users, FAAinstituted a comprehensive examination of air-space use procedures in October 1981. This ef-fort, known as the National Airspace Review(NAR) is a 42-month joint undertaking by FAAand the aviation industry “to identify and imple-ment changes which will promote greater effi-ciency for all airspace users and simplify [theATC] system. Additionally, the NAR will matchairspace allocations and air traffic procedures totechnological improvements and fuel efficiency

programs.”2 2 The portion of NAR concerned spe-cifically with terminal area ATC procedures wascompleted in July 1984.

Many of the procedural changes sought byairspace users and under study by FAA in NARwere also examined by a special aviation indus-try task force convened at the request of FAAunder the auspices of the Airport Operators Coun-cil International. The task force report, issued inSeptember 1982, strongly urged FAA to revisepresent airspace use procedures, especially thosepertaining to the use of multiple runways underInstrument Meteorological Conditions.23

Reduced Lateral Separation

Several of the proposed revisions would per-mit changes in the standards for lateral separa-tion of aircraft under instrument flight conditions.The present standards often severely restrictthroughput because they preclude use of all theavailable runways when visibility is reduced. Ifthe airport could continue to operate these run-ways, the disparity between IMC and VMC ac-ceptance rates could be substantially narrowed.The following are the major capacity-relatedchanges under consideration.

Converging Runways

Converging runways are those whose extendedcenterlines meet at a point beyond the runwaysthemselves. Simultaneous approaches to con-verging runways are presently authorized onlyduring VMC. The proposed procedure would ex-

25-420 0 - 84 _ 6

— —-

72 . Airport System Development

tend this authorization to IMC in certain circum-stances. The major problem to be overcome inusing converging runways under instrument con-ditions is development of procedures to assureseparation in the event of a blunder by one of theaircraft during the approach or in case both air-craft must execute a missed approach at the sametime. These procedures, in turn, depend on theavailability of improved surveillance radar, MLSto provide missed approach guidance, and per-haps automated aids for the controller to coordi-nate simultaneous approaches to two runways.

In time, it maybe possible to extend these pro-cedures to the case of intersecting runways-thosewhose surfaces actually cross at some point. Inaddition to the problems of blunder protectionand separation assurance during missed approaches,this configuration poses the risk of collision be-tween two aircraft on the ground, and there mustbe adequate safeguards that aircraft on both run-ways can stop or turn off before reaching the in-tersection. Because of the inherent safety prob-lems, most observers are skeptical about thefeasibility of using this type of runway layout forinstrument operations.

Dependent Parallel Runways

At present, instrument approaches maybe con-ducted on parallel runways that are as close as3000 ft apart so long as a diagonal separation of2 nautical miles (nmi) is maintained between ad-jacent aircraft. For parallel runways separated by2,500 ft, the diagonal spacing requirement is 2.5nmi. In addition, aircraft must be separated by1,000 ft vertically or 3 nmi horizontally as theyturn onto their parallel approach paths. Theserunways are termed dependent because the ap-proaches to each must be coordinated to main-tain the prescribed diagonal spacing. Hence, theoperational rate attainable on either is constrainedby the movement of aircraft on the other.

FAA studies suggest that the diagonal spacingrequirements for IFR operation on dependent par-allel runways could be reduced. For runwaysseparated by 2,500 ft, the standard could be re-duced from the present 2.5 nmi to 2 nmi with cur-rent technology and no other changes in existing

procedures. 24 Reducing the spacing requirementsfor approaches to parallel runways less than 2,500ft apart requires: 1) that the pilot be able to con-firm that he is, in fact, on approach to the properrunway since radar surveillance would no longerbe sufficient; and 2) that wake vortices from air-craft approaching one runway do not interferewith operations on the other. Because of wakevortex, current procedures require that aircraftapproaches to closely spaced parallel runways(less than 2,500 ft apart) be treated as approachesto a single runway and separated accordingly.

An operational solution to the wake vortexproblem on closely spaced parallel runways en-tails that the following additional conditions bemet:

●

●

●

●

●

there must be a steady crosswind to diminishthe effects of wake vortex, but the windvelocity must be less than maximum cross-wind limitation;small aircraft that are vulnerable to wakevortices must use the upwind runway of theclosely spaced pair;the threshold of the upwind runway mustbe displaced from that of the downwindrunway;the upwind runway must have a high-angleglide slope to allow for a steeper descent byvulnerable aircraft so that they can remainabove, and hence avoid, wake vortices; andwind monitors must be set up along the ap-proach path to ascertain that conditionsare favorable for the dissipation of wakevortices.

Satisfying these requirements may be difficultat airports that do not have runways with suitablystaggered thresholds and a sufficiently large num-ber of aircraft that can approach at a steeper thannormal glide slope to avoid wake turbulence. Inaddition, there are operational difficulties thatmay limit the applicability or the capacity benefitsof this procedure. First, the wake vortex gener-ated by a heavy aircraft carrying out a missed

Ch. 4—Techno/ogy . 73

approach could interfere with operations on theother runway. One possible solution would be torequire that both the leading and trailing aircraftexecute missed approaches along diverging pathswhenever the leading heavy aircraft misses the ap-proach. Second, interference from departurescould limit capacity gains since it may be neces-sary to retain present longitudinal separationstandards between heavy aircraft departing onone runway and small aircraft landing on theother in order to avoid wake turbulence. Finally,as the distance between parallel approaches is re-duced, there will be a need for more accurate sur-veillance to verify that aircraft are on approachto the proper runway. The radar now in use,which has a 5-milliradian accuracy and a 4-secondupdate rate, is probably not adequate for this pur-pose and may have to be replaced with new ra-dar capable of l-milliradian accuracy and 1-second update .25 Such radar performance has beenachieved in the Precision Approach Radar systemformerly installed at some airports but now de-commissioned. Military radar also has this capa-bility but would have to be adapted and testedbefore use in civil aviation.

Independent Parallel Runways

Independent instrument approaches to paral-lel runways separated by at least 4,300 ft arepresently authorized under the following condi-tions: 1) when aircraft are turned onto the ap-proach path, they must be separated vertically byat least 1,000 ft or laterally by 3 nmi from air-craft turning on approach to the other runway;and 2) a “No Transgression Zone, ” at least 2,000ft wide, must be maintained between the ap-proaches, with a separate controller assigned tomonitor this zone. A study by FAA indicates that,as with dependent parallel runways, reducinglateral spacing for independent parallel runwaysfrom 4,300 to 3000 ft would require installationof more accurate radar but no other changes incurrent procedures. 26

251bid.‘b Ibid.

Triple Parallel Runways

Demand at some of the busier airports, suchas O’Hare, Atlanta, Dallas/Fort Worth, Pitts-burgh, and Detroit, sometimes exceeds the capac-ity of the runway system in IMC, and additionof a third approach stream would be desirable.Current ATC procedures allow approaches to tri-ple parallel runways only during VMC. Revisionof separation standards to permit their use dur-ing IMC would significantly expand the time thatmaximum airfield capacity is available at thesefew very busy airports.

While the requirements for three parallel ap-proaches are similar to those for two parallel ap-proaches, the addition of a third runway com-plicates the approach procedures and limits possiblegains in capacity utilization. To be most effective,at least the outside pair of approaches should beindependent from each other, although both maybe dependent on the middle runway. If all threeparallel runways were dependent, there would beonly a minor increase in throughput compared tothat attainable with two dependent runways.Also, since a blunder on one of the outside ap-proaches could affect more than one other air-craft, establishment of triple independent paral-lel approaches necessitates two “No TransgressionZones, ” with a separate controller assigned tomonitor each. Because the l, 000-ft vertical separa-tion rule for aircraft turning onto parallel ap-proach paths still apply, final approach courses,particularly for the center runway, would belonger–thereby diminishing somewhat the through-put gain attainable with the triple parallel con-figuration.

A few airports have runway layouts that allowa converging approach to be added to two existingparallel approaches. This third approach is usedduring VMC, but in IMC the converging runwaymust be closed because separation between air-craft executing missed approaches cannot beassured visually.

The requirements for three approaches, one ofwhich is converging, are similar to those for twoconverging approaches. However, establishing thethird converging approach for use with a paral-lel pair involves additional safeguards because ablunder by an aircraft on one of the outside ap-

preaches affects more than one other aircraft. Themissed approach path for the converging runwaymust be coordinated with those of the other tworunways—a procedure that is quite complex andcannot be implemented without further researchand evaluation. In particular, FAA is studyingwhether MLS will be required to provide non-conflicting missed approach paths .27

Reduced Longitudinal Separationon Final Approach

Current procedures require longitudinal (in-trail) separation of 3 nmi between aircraft con-ducting instrument approaches to the same run-way In VMC, in-trail separations of 2.5 nmi

Ch. 4—Technology ● 7 5

For those airports where runway occupancy timeaverages so seconds or less, FAA studies indicatethat minimum in-trail separation of 2.5 nmi couldbe allowed in circumstances where wake vortexand ATC workload permit. Flight tests conductedby the U.S. Air Force have demonstrated the fea-sibility of 2.5-mile separation for military use.However, safety standards for commercial oper-ations are different than those for military oper-ations, and analysis of radar accuracy and updaterates, controller and pilot response times, and air-craft performance characteristics will be neededto determine whether 2.5-mile separation duringIMC is safe for civil aviation. Since there is a di-rect relationship between in-trail separation andthroughput, this procedural change would be avery effective method to reduce delay under in-strument flight conditions.

Present ATC procedures specify that the nom-inal longitudinal separation standards for VMCor IMC be adjusted to compensate for the possi-ble effects of wake turbulence. These separationstandards, shown in figure 9, are based on a three-way classification of aircraft according to grosstakeoff weight and attempt to account for thewake-turbulence characteristics of aircraft andtheir vulnerability to wake vortex encounters:

●

●

●

heavy ah-craft—maximum gross takeoffweight (GTW) in excess of 300,000 lb,large aircraft—maximum GTW between12,500 and 300,000 lb, andsmall aircraft—maximum GTW less than12,500 lb.

Definition of aircraft categories based on GTWalone is not an accurate index of of wake vortexgeneration for all aircraft, notably those aircraftwhose GTW is slightly over 300,000 lb such asthe DC-8 and B-767. As the number of B-767 air-craft in the fleet grows and as the re-engining pro-gram for DC-8S proceeds, aircraft whose GTWis roughly 300,000 lb will become an increasinglylarge proportion of the commercial aircraft fleet.If these aircraft continue to be classified as “heavy,”greater arrival separations will be required, withadverse effects on capacity and delay.

If aircraft were classified on the basis of moreprecise analytical or empirical data concerningtheir specific aerodynamic and wake-vortex char-acteristics, it might be possible to reduce the in-trail separation rules for some types. As a mini-mum, the use of approach weight rather thanmaximum GTW as the basis for separation cri-teria could be considered. To be even more pre-

Figure 9.—Arrival and Departure Separations

utical MilesInstrument Flight Rules

Lead

s 3 3 3

L 4 3 3

H 6 5 4

Minimum Departure Separations—SecondsVisual Flight Rules* Instrument Flight Rules

K —., I [ I f l - . - : l I I [

1 s I 35 I 45 [ 50

H I 120 I 120 I 90

KEY: S = Small, L = Large, H = Heavy (see text.)

76 ● Airport System Development

cise, wingspan, approach speed, and engine andflap configurations should also be taken into ac-count. A recommendation to this effect was madein the report of the Industry Task Force on Air-port Capacity Improvement and Delay Reductionand is now under consideration by FAA.31

Separate Short Runways forSmall Aircraft

The current practice in air traffic control is toorganize aircraft on approach according to timeof arrival, not type of aircraft. So long as the traf-fic mix is reasonably uniform, this practice hasa minor effect on throughput. At many airports,however, small aircraft represent a significant por-tion of traffic. To avoid wake turbulence gener-ated by the heavy and large classes of transports,these small aircraft are required to follow in trailat distances of 4 to 6 nmi from the larger aircraft.Since many of these small aircraft operate at slowspeeds, safety requires that larger and faster air-craft be spaced more than 3 nmi behind so thatthe leading small aircraft are not overtaken on ap-proach. One way to overcome these operationalpenalties would be to segregate small general avia-tion and some commuter aircraft into a separatetraffic stream using a different (short) runway. Atsome airports such a runway is already availablebut not usable for instrument approaches because

of inadequate instrumentation; at others, newrunways would have to be built and equippedwith MLS.

There is some disadvantage to separate shortrunways in that they do not provide as muchoperational flexibility as a full-length additionalair carrier runway. However, the separate shortrunway can be built at a fraction of the cost ofan air carrier runway, and runway siting prob-lems as well as local environmental issues maybe easier to resolve.

Ideally, the separate short runways for smallaircraft should be parallel to and operate inde-pendently from the main runway used by largeair carrier traffic. A short runway that is not par-allel to the main runway would not be availablefor use in IMC unless revised procedures for con-verging instrument approaches are also imple-mented; but even so, dependency on the mainrunway would limit the throughput gain becauseof the need to coordinate the two traffic streams.If the procedures described above to reduce spac-ing requirements for independent and dependentparallel approaches prove feasible, the siting ofthese short secondary runways could becomeeasier. Another development that would facilitatesiting of short runways and broaden the appli-cability of the concept would be installation ofMLS to allow curved approaches and steeper glideslopes by small aircraft, not only to alleviate waketurbulence problems but also to achieve a greaterrate of runway use.

WEATHER AND ATMOSPHERIC EFFECTS

Perhaps the single greatest technological need scribed above is a better method to detect or toin relieving delay at airports, aside from improved predict the occurrence of wake turbulence.radar to monitor aircraft more closely spaced interminal airspace, is development of techniques Beyond this, improvement in the ability to pre-to improve the detection and prediction of weather diet weather and atmospheric phenomena couldand atmospheric effects. Weather-related technol- lead to general reductions in delay. Present tech-ogies are typically viewed as safety improvements nology does not always permit sufficiently ac-rather than capacity improvements, but there are curate prediction of the time and magnitude ofsignificant exceptions—notably methods to pro- adverse weather conditions, making it necessarytect from wake vortices. Current aircraft arrival to increase safety margins and thereby reduceand departure separations are predicated in large throughput. The ability to foresee disruptions duepart on avoidance of wake vortices, and the key to weather would permit planning to compensateto many of the revised approach procedures de- fer the impacts on traffic flow.

Ch. 4—Technology 77

Wake Vortex

Wake vortex is an aerodynamic disturbancethat originates at the wingtips and trails in cork-screw fashion behind the aircraft. Since the strengthof the turbulence increases with lift, the strongestvortices occur behind heavy aircraft. These vor-tices spread downward and outward in the wakeof the aircraft and may persist along the flight pathfor as long as 2 or 3 minutes in still air. Whenthe aircraft is within 300 ft of the ground, the vor-tices can bounce off terrain and rise back towardthe flight path, creating even more disturbance.Wake turbulence can be of such strength andduration that it poses a hazard to following air-craft (especially smaller aircraft), and present pro-cedures require separation of 3 to 6 nmi depend-ing on the size of the leading and following aircraftand the movement of the airmass.32

Alternatives to the present procedural methodof avoiding wake turbulence are being soughtboth in the interest of safety and for the capacitybenefits that could be realized through closer spac-ing of aircraft in the approach zone. Two avenuesare being taken. FAA has concentrated on devel-opment of techniques to detect wake vortex andto predict its movement and persistence. NASAhas focused on aerodynamic research to providebetter understanding of the mechanics and causesof wake vortex and to develop designs to alleviateit at the source. NASA research indicates that cer-tain combinations of flaps, spoilers, and protru-sions on wing surfaces can reduce turbulence orcause it to dissipate more quickly. Unfortunately,many of these techniques also tend to increasenoise and reduce energy efficiency. Work is con-tinuing on ways to minimize wake vortex at anacceptable price in terms of noise and fuel con-sumption, but no ready solution is in sight. Thisis an important area of research and developmentsince the alternative—wake vortex detection andavoidance—has not been perfected to the pointthat pilots have confidence in its reliability.

FAA has sought to develop equipment and aconcept of operation that provide real-time vortex

32J. N. Barrer, “Operational Concepts for Reducing Vortex Spac-ings on Closely Spaced Parallel IFR Approaches, ” The MITRE Corp.,WP-81W520, September 1981.

sensing capability and to devise a predictivealgorithm that will warn pilots and controllers.An experimental device, known as Vortex Advi-sory System (VAS), was installed and tested atO’Hare in 1978. VAS is made up of wind sensorsmounted on towers along the approach path, acentral computer to process wind data and pre-dict the strength and movement of wake tur-bulence, and a display to alert the controller whena hazardous condition exists. VAS has not yetproven operationally acceptable, and FAA plansfurther development and test.

The disadvantage of VAS is that it does notdetect wake vortices; it only measures wind direc-tion and velocity, from which an inference canbe made about the presence and strength of waketurbulence. This deficiency is particularly evidentfurther out on the approach path (beyond themiddle marker) and in crosswind conditionswhere turbulence on one approach path maymigrate to a parallel approach. To overcome theselimitations, FAA is also investigating other tech-nological approaches such as short-wave radar,lasers, and infrared devices that could provide bet-ter long-range sensing and wider coverage.

No practical solution is now in view, and itseems likely that procedural methods to avoidwake turbulence will continue to be employed.So long as wake vortices cannot be reliably de-tected and predicted, the present separation stand-ards (perhaps with some modification to accountfor the aerodynamic characteristics of specifictypes of aircraft) will remain in force and precludeany throughput gains that might be achievedthrough reduced in-trail spacing.

Wind Shear

Wind shear is any sudden change in wind veloc-ity or direction. It may be associated with warmand cold fronts, low-level jet streams, or moun-tainous terrain. One of the most dangerous typesof wind shear is a downward surge of air strik-ing the ground and spreading out in all directions.This kind of wind shear is often associated withthunderstorms, but it may occur in other weatherconditions. These downdrafts, called microbursts,are difficult to predict because they are small and

78 . Airport System Development

localized, extending only 2 or 3 miles and oftenl a s t i n g l e s s t h a n 5 m i n u t e s .

For the pilot of an aircraft , wind shear is ex-

perienced as an abrupt increase or decrease of l ift( o r o f t e n o n e r a p i d l y f o l l o w e d b y t h e o t h e r )

caused by a sudden shift in the relative wind. I nthis condition, the aircraft may gain or lose al-titude unexpectedly and become difficult to con-trol in angle of attack and flight path (see fig. 10).If this occurs near the ground on takeoff or land-ing, there can be extreme hazard.33 While the pri-

mary concern is safety of flight, wind shear alsodisrupts airport activities and can cause suspen-sion of operations until the condition abates.

In 1982, The Federal Government undertooka project known as Joint Airport Weather Studies(JAWS) to provide a better understanding of windshear, thunderstorms, and related weather hazardsand to identify weather conditions that could bewarning signs to pilots. A multi-agency effort in-volving the National Science Foundation, the Na-tional Aeronautics and Space Administration, theNational Oceanic and Atmospheric Administra-tion, and the Federal Aviation Administration,JAWS collected data on downbursts at DenverStapleton airport during a 3-month period in thesummer of 1982. The knowledge of wind shear

Figure 10.—Effects of Low=Aititude Wind Shear

<

Base ofthunderstorm

~ / / / / I I

\ Projected flight path of aircraft~..

— wa ,

if no intervention by pilot .:. .$-=”a-.

“.-g

k. ‘r,1.

.-~;

,<

,, =,.

The downburst spreads out as it nears the ground. The aircraft, instead of following a straight path to the runway, encounters first an abruptincrease in headwind which lifts the nose, and then a sudden strong tailwind, which forces the nose down. If the pilot cannot compensatefor these wind changes at low altitude, the aircraft may crash.

SOURCE: ICAO Bulletin

Ch. 4—Technology ● 7 9

gained through JAWS will contribute to the LowLevel Wind Shear Alert System (LLWSAS) whichprovides the air traffic control tower with infor-mation on wind conditions near the runway.LLWSAS consists of an array of anemometers thatread wind velocity and direction around the air-port and signal the sudden changes that indicatewind shear. LLWSAS is now installed at 60 air-ports, and FAA plans to deploy 50 more by 1985.

Over the longer term, FAA is developing othersystems intended to provide better and moretimely weather information at airports, both toimprove safety and to help in traffic management.The Automated Weather Observing System(AWOS) will gather weather data from urtrnannedsensors, automatically formulate weather reports,and distribute them to airport control towers.AWOS will also broadcast this information topilots as voice synthesized messages over VHFradio. Implementation of the system, scheduledfor the period 1983-90, began with a l-yeardemonstration program in June 1983, when 21

units were put into operation at towered and non-towered airports in various locations. Full deploy-

m e n t a t 7 4 5 a i r p o r t s i s s c h e d u l e d t o b e g i n i n1 9 8 6 .34 A similar system, Joint Automated Weather

“Several GA user groups have argued that the AWOS timetablecould be accelerated by a year or more and have asked FAA to recon-sider the deployment schedule.

Observation System (JAWOS), is planned for in-stallation at some medium and large hub airports.JAWOS will automatically gather local weatherdata and distribute it to other air traffic controlfacilities and to the National Weather Service.

In cooperation with the Department of Defenseand the National Oceanic and Atmospheric Ad-ministration, FAA is also developing a next gen-eration nationwide weather network based onpulsed Doppler radar (NEXRAD). This networkwill provide more accurate information on pre-cipitation, reflectivity, wind velocity, and tur-bulence. NEXRAD will probably not provide theminute-to-minute observations needed to detectsmall localized downbursts that produce windshear, nor will it be able to detect wind shear inthe absence of precipitation. Still, NEXRAD willgreatly improve the quality and comprehensive-ness of the weather information available to airtraffic controllers and will be a significant aid inmanaging traffic to compensate for adverse weatherconditions. A total procurement of 160 units isplanned, with the last scheduled to be in place andthe system fully operational by 1992.

NOISE CONTROL AND ABATEMENT

Aircraft noise, especially the noise of jet air-craft, is one of the greatest barriers to airport uti-lization and expansion, and it is the most com-mon subject of complaint by airport neighbors.The areas of severest noise impact are just beyondthe ends of runways, but noise levels can be unac-ceptably high elsewhere along approach and de-parture paths where aircraft are close to theground. In legal actions brought by airport neigh-bors, the courts have generally found that the air-port operator is responsible for injury due to re-duced property value or nuisance and have awardeddamages to property owners and others affectedby noise.

There are two ways to reduce noise. One is toquiet the aircraft themselves, notably the engines,

and FAA has imposed progressively stricter noisestandards for aircraft in FAR 36 and FAR 91E.35

As a result, new aircraft entering service are muchquieter than earlier models, and some older air-craft have been equipped with new, quieter en-gines. While research is continuing on aircraftnoise, airframe and engine manufacturers tend tothe view that large-scale and cost-effective ad-vances in the technology of noise suppression willbe increasingly difficult to find.

35FAR part 36 defines noise requirements for certification of newaircraft and engines. FAR Part 91 Subpart E sets the timetable forcompliance and calls for retirement or retrofit of aircraft (both foreignand domestic) that do not comply with FAR Part 36 by 1985. Toprotect air service to small communities, FAR Part 91 Subpart Eallows three additional years (until 1988) for twin-engine aircraftwith 100 or fewer seats to achieve compliance.

80 ● Airport System Development

The other approach has been to impose opera-tional restrictions on airports—principally in theform of limits on the hours of use, frequency offlights, and the approach and departure routesthat may be taken. Airport operators and airlineshave resisted these measures since they reduce thecapacity of the airport overall or at peak timesand because noise abatement flight proceduresoften result in lengthier, less fuel-efficient pathsto and from the airport. Two studies of airportcapacity published recently have stressed the needto lessen some of these restrictions in the interestof increasing airport capacity and making moreefficient utilization of aircraft.3b 37

The discussion that follows addresses first pro-spective improvements in aircraft technology thatmight lessen noise, and then procedural solutionsto alleviate the noise problem.

Aircraft Noise

Aircraft noise has two components: enginenoise produced by moving engine parts and byair flow through the engine, and airframe noisecaused by the passage of air over aircraft surfaces.In early jet aircraft, the engine was the predomi-nant noise source. Advances in engine technol-ogy over the past 20 years have reduced enginenoise to the point where the engine and the air-frame are now about equal contributors to air-craft noise on landing. The engine is still the ma-jor noise source on takeoff.

Engine Noise

The principal sources of noise in a jet engineare: 1) the fan, 2) the compressor and turbine, and3) the exhaust. The relative importance of thesesources varies somewhat with the design of theengine and the operating regime, but exhaust noiseis generally the greatest of the three.

Efforts to reduce fan noise have centered onaltering the design of the fan blades and incor-porating sound absorbing material in the fan caseand the inlet and discharge ducts. Typically, this

36 Report and Recommendations of the Airport Access Tskk Force(Washington, DC: Civil Aeronautics Board, March 1983).

37 Report of the Industry Task Force on Airport Capacity Improve-

ment and Delay Reduction, op. cit.

sound absorption is accomplished by a liner ofporous material backed by cavities to trap sound.The newer aircraft engines now in service incor-porate these design concepts, but further, smallnoise reductions may still be achieved.

Compressor and turbine noise are generated in-side the engine by the compression, heating, andexpansion of the air passing through. Methods forreducing compressor and turbine noise have in-cluded redesign of compressor parts and turbineblades to modify their sound characteristics, anduse of sound absorbing material. Since the abilityto alter the design or configuration of the com-pressor or turbine is limited by mechanical andaerodynamic considerations and engine load re-quirements, it is expected that the principal methodto attain further reductions in compressor and tur-bine noise will be acoustic treatment in the intakeducts. Research is now aimed at development ofimproved acoustic material capable of withstand-ing the hot and cold environment of the com-pressor and turbine, and at reducing the cost ofthese noise suppression treatments.

Exhaust noise results from the turbulent mix-ing of hot, high-speed exhaust gases with the am-bient air. The way to reduce this noise is throughtechniques that lower the temperature and veloc-ity differential between the exhaust and the out-side air, but without loss of engine efficiency andthrust. In the early, pure turbojet engines, all ofthe intake air was passed through the hot sectionof the engine, from which it exited at high veloc-ity. These engines were very noisy. A later de-velopment diverted some of the air from the com-pressor around the combustion chamber andturbine and merged it with the exhaust stream—thus shielding the high-velocity exhaust with acooler, slower moving sheath of air from the com-pressor. These low bypass ratio engines were moreefficient and proved, on average, to be about 8decibels (dB) quieter than pure turbojets.38 Enginesintroduced in the 1970s made use of an evenhigher bypass ratio to achieve both greater fuelefficiency and a further 8- to 10-dB reduction ofnoise .39

38 The bypass ratio is the amount of air diverted around the com-bustor relative to that which passes through it.

39 For reference, a change of 3 dB is just perceptible to the humanear. A reduction of about 10 dB is perceived as halving the amoyanceof a sound source.

Ch. 4—Technology ● 8 1— .

Engine manufacturers are continuing to exploretechniques such as high-pressure turbines, exhaustdiffusers, and improved internal cooling methods–principally to increase engine efficiency but alsofor their potential to reduce noise. They are alsoevaluating internal flow mixers to combine low-velocity bypass air with higher velocity engineflow to produce an exhaust stream with less tur-bulence and a more uniform exit velocity. Theseefforts are yielding diminishing returns since fur-ther noise reduction involves very tightly coupledtradeoffs with fuel efficiency, production tech-niques, and maintenance costs. Attainment ofnoise levels significantly lower than those of FARPart 36 appears to be very difficult without a sac-rifice of fuel efficiency or a large cost penalty.

Airframe Noise

Airframe noise stems primarily from turbulentair flow past the undercarriage, leading and trail-ing edges of high-lift devices, aircraft cavities, andprojections from the aircraft surface. For an air-craft in flight, these noises intermingle and are notusually distinguishable as to source. The principalmethods available to reduce aerodynamic noiseare wing design, high lift systems, and aircraftstreamlining.

Recent exploratory development in aircraftwing design has included supercritical airfoil sec-tions and winglets. Aircraft using these wing de-sign features are currently being flight tested. Fun-damentally, the supercritical airfoil and wingletswould reduce drag and provide additional lift, butthey also serve to reduce aerodynamic noise some-what. Drag is exhibited as turbulence in the wakeof aircraft, and turbulence produces noise. Fur-ther, insofar as reduced drag and increased lift per-mit the aircraft to be operated at lower power set-tings on takeoff and landing, these aerodynamicimprovements might provide a secondary bene-fit of reduced engine noise.

Advanced high-lift systems make use of two-segment trailing edge flaps and a variable camberon the leading edge of the wing. High-lift devicesof this sort are currently used on Short Takeoffand Landing (STOL) aircraft such as the deHavillandDHC 7. They have also been incorporated in somelarge transport aircraft. The 747 and later model

727 aircraft have triple-slotted flaps, and the 767has both variable camber leading-edge flaps anddouble-slotted trailing edge flaps. These systemsdo not necessarily produce quieter aircraft; in fact,they may be noisier. However, high-lift devicespermit steeper approach and takeoff paths, therebyreducing the size and severity of the aircraft noisefootprint on the ground and leading—in effect—toless aircraft noise overall.

Techniques to streamline aircraft include place-ment of fairings around extended landing gear andother projections from the aircraft surface andenclosure of wing and body cavities. Such featuresare intended primarily to improve the aerody-namic performance of the aircraft, but they couldalso lessen aerodynamic noise. Another streamlin-ing technique involves strategic placement of theengines at locations where the airframe can actas a shield for engine noise. There are criticaltradeoffs between engine placement and aircraftperformance and safety that need to be treatedcarefully. There is also a need for additional re-search to improve the understanding of how theengines and airframe interact in the productionand suppression of noise.

Many of the techniques described above mightlessen aerodynamic noise, but the overall reduc-tion would probably be rather small. There is awidely held view among aircraft designers thatthe newest aircraft are close to the practical lowerlimit of aerodynamic noise and that further re-ductions will be technically difficult, prohibitivelycostly, and perhaps disadvantageous for otheraspects of aircraft performance. While some ofthese techniques will be pursued and might be in-corporated in future aircraft, the general opinionis that there are no aerodynamic solutions thatwill lead to large-scale reductions in aircraft noise.

Aircraft Operating Procedures

In addition to technological measures to reducenoise at the source, there is the the proceduralsolution of operating aircraft in a way that alle-viates the effect on noise-sensitive areas. Manysuch measures have already been adopted—somelocally, some more generally—and work is con-tinuing to improve these procedures, to devise

82 . Airport System Development

new ones, or to extend their application morewidely.

Procedures in use today are limited, in somecases, by safety and capacity considerations andby the capabilities of the ATC system. The abilityto apply these procedures is also affected by con-ditions of wind, weather, and visibility. Perhapsthe greatest deficiency, however, is that restric-tions are applied airport by airport—often as aresult of local ordinance—in a fashion that isfragmentary, confusing, and inefficient. Aircraftoperators complain that both airport capacity andaircraft utility are wasted and that market oppor-tunities are lost. The Airport Access Task Forceof the Civil Aeronautics Board (CAB) devotedmajor attention to the question of noise abatementprocedures and urged the Federal Government toreduce the number of locally imposed aircraftoperating restrictions and to develop nationallyapplicable procedures that would appropriatelybalance public concerns about noise with the in-terests of air commerce.40

Prospective advances in technology might makesome of the procedures in use today more effec-tive or less onerous to aircraft operators. One suchprocedure is departure thrust management, whichnecessitates adjustments in power settings duringclimbout and exit from the terminal area. Asnewer aircraft with better performance character-istics and quieter engines come to predominate inthe fleet, these departure practices may be easierto implement, or—in some instances—they maynot be required as often. The CAB Airport Ac-cess Task Force estimated that phasing out air-craft with low bypass engines (from 94 percentof the fleet in 1980-81 to 10 percent by 2000)would produce an average noise reduction ofalmost 6 dB systemwide, even if operations wereto increase by 50 percent.41

Preferential runway use is another method forreducing the extent or severity of noise impact onthe surrounding community. This involves using,whenever possible, those runways that minimizethe number of people or the area exposed to air-

craft noise. The effectiveness of preferential run-way use is site-specific since it depends on the run-way layout in relation to land use patterns, theprevailing wind and weather, and the installationof navigation and landing aids. Implementationof the Traffic Management System and deploy-ment of MLS might make it possible to extend thispractice to other airports or allow it to be usedin a wider spectrum of weather conditions.

On the other hand, preferential runway use hasthe effect of exposing the unfortunate few wholive or work in affected areas to more unremit-ting noise than might be considered their “fairshare.” For this reason, it may be more equitableto temper preferential runway use with somevariation of runway use patterns. Distributingnoise more uniformly among areas surroundingthe airport would lessen the impact on some, butat the risk of antagonizing perhaps far more whoare not presently exposed to aircraft noise.42

Preferential flight paths are prescribed routingsfor arriving and departing aircraft to avoid over-flight of noise-sensitive areas. This procedure isfrequently combined with preferential runwayuse, but may be used even where the airport hasonly a simple runway layout. At some airports

Photo credit: Dom McGrath, Jr.

Houses under the approach path to San Diego airport

Ch. 4—Technology ● 8 3

the use of preferential flight paths is limited bythe availability or capability of the installed land-ing and navigation aids. It is expected that MLSwill enhance the ability to use noise-avoidanceflight paths since it provides more precise and flex-ible approach guidance with a wider range of cov-erage than the existing ILS. MLS would permitmultiple final approach paths, including curvedapproaches. The ability to fly curved approachpaths will enable aircraft to avoid noise-sensitiveareas in IMC much as they do now in VMC andwill aid in the reduction of noise levels for air-

ports with noise-sensitive land uses located underthe straight-in approach path. MLS would alsoallow some aircraft to fly steeper approach paths,which—by keeping aircraft higher as they passover development around the airport-will reducethe area of high noise impact. In FAA studies ofthe application of MLS to specific sites, it wasfound that the use of curved and segmented IMCapproaches made possible by installation of MLSat airports such as La Guardia, Minneapolis, SanFrancisco, Seattle, and Washington Nationalcould lead to significant noise reductions.

AIRPORT SURFACE UTILIZATION

An airport is an interconnected set of physicalfacilities and components. For it to function effi-ciently, the capacities of each of these elementsmust be matched. Relief of a bottleneck in onepart of the airport will not have the desired ef-fect on overall throughput unless other parts arecapable of absorbing a greater influx of traffic.Indeed, a common experience is that enlargementof one part of the airport complex simply shiftsthe delay elsewhere, to the next most constrain-ing element.

Nowhere is this more evident than on the air-port surface. Measures to augment runway capac-ity or to increase the flow of traffic through theairspace may be of little practical benefit unlessaircraft are able to move expeditiously on and offrunways and to and from the terminal building.It is on airport taxiways and aprons that aircraftare closest together and that their speed is lowest.If the movement of aircraft on the airport surfaceis constrained by runway and taxiway design andlayout, by operational procedures, or by poor vis-ibility, the effect ripples throughout the airportand airspace, and delays accumulate.

This section examines three types of technol-ogy deployed on the airport surface: surveillanceand control systems, taxiway design and lighting,and equipment used at parking aprons and gates.In general, new airport surface utilization tech-nologies will not lead to major increases of air-side capacity, which is largely determined byavailable runways and airspace use procedures.The primary capacity benefits are indirect—in-

creased safety, especially during inclement weather,and relief of operational impediments to makingefficient use of the airside.

Surveillance and Control

Surveillance and control of aircraft movementon the airport surface is accomplished largely byvisual means. In darkness or fog—and even ingood visibility at large, complex airports-AirportSurface Detection Equipment (ASDE) is used byair traffic controllers to augment and confirm in-formation obtained from visual surveillance of theairport surface. Used primarily at high activityairports, ASDE allows controllers to locate andmonitor the movement of aircraft and groundequipment on runways, taxiways, and apron areas.

The existing equipment, designated ASDE-2,utilizes tube technology, which presents reliabilityand maintenance problems. In addition, utility ofASDE-2 is limited by display resolution, bright-ness, airport map definition, and poor weatherpenetration capability. The last is particularly sig-nificant under conditions of precipitation or fog,when the system is needed the most. Under theseconditions, visual surveillance is virtually impos-sible, and ASDE is the controller’s primary meansto obtain the necessary information.

A new system utilizing solid state technologyis programmed for deployment by 1986-89. Thissystem, ASDE-3, is expected to increase reliabilityand reduce system maintenance, in addition to im-proving display resolution and weather penetra-

. .

84 Airport System Development

tion. More accurate information on the specificlocation and movement of aircraft and groundequipment on the airport surface provided byASDE-3 might allow reductions in safety-dictatedseparation of aircraft and promote more efficientutilization of runways and taxiways. Ultimately,small gains in airfield capacity could result.

Research and development on more advancedsystems will be needed since even ASDE-3 can-not identify aircraft and surface vehicles under allweather conditions or be used by the controllerto guide them to their destinations. At present,the capability of navigation systems to help air-craft land in very low visibility (Category IIICoperations) exceeds that of surveillance and con-trol systems to guide them after they are on theairport surface.

The Tower Automated Ground SurveillanceSystem (TAGS) is a display enhancement intendedfor use in conjunction with ASDE at major air-ports. The ASDE-3 search radar provides a mapof the airport and the location of aircraft on theairport surface, which are shown graphically onthe ASDE display. TAGS will provide, for trans-ponder-equipped aircraft, a flight identificationlabel alongside the position indicator on the ASDEdisplay. Since TAGS operates by receiving asignal transmitted directly by aircraft equipment,the system would be virtually immune to weather.Presentation of flight identity by TAGS wouldalso improve ground control capability in goodvisibility. TAGS is presently in the exploratoryphase of development and probably will not beready for deployment until the 1990s.

Taxiways

The design and layout of taxiways, particularlythose that provide egress from runways, have animportant effect on runway occupancy time(ROT) .43 The placement of exit taxiways, wherelanding aircraft turn off the runways, and theangle at which these taxiways intersect the run-ways can be crucial. Poorly placed exit taxiways

prolong runway occupancy by forcing incomingaircraft to taxi at low speed for some distancebefore clearing the runway. Taxiways that leavethe runway at right angles force the aircraft tocome almost to a complete stop before turning.Since the runway occupancy rule (with a few ex-ceptions in VMC) does not allow an approachingaircraft to cross the runway threshold while thepreceding aircraft remains on the runway, longerrunway occupancy either forces the air traffic con-troller to increase arrival spacing or causes someapproaching aircraft to execute a go-around—both of which are disruptive of throughput.

At some airports, relocating taxiways so thataircraft with shorter stopping distances can leavethe runway sooner would lower ROT by as muchas 20 to 30 percent. At others, providing a drift-off area alongside the runway or redesigning taxi-ways so that they diverge from the runway grad-ually and allow aircraft to turn off at higher speeds(i.e., sooner after landing) would have much thesame effect. However, translating reduced ROTinto a corresponding throughput gain is notstraightforward since it depends on whether therunway layout, the airspace geometry, and theATC procedures will permit closer arrival spac-ing to take advantage of the shorter runway oc-cupancy. Still, it is an avenue to be explored, andamong the recommendations of the Industry TaskForce on Airport Capacity Increase and Delay Re-duction were several that urged FAA and airportoperators to adopt measures that would assistfaster exit from runways.44 One of these was toadopt procedures and rules that would increasethe motivation of pilots to use specified rapid exitsand improve the coordination between controllersand pilots in minimizing ROT.

Marking and lighting of taxiways can be as im-portant as their design and physical layout in ex-pediting ground movement of aircraft. For run-way exits to be used to their full potential, pilotsmust be able to detect their location and identifythe one they are to use with ample Ieadtime. Thisis especially critical at night and during periodsof poor visibility. A taxiway marking and lightingsystem that conveys the necessary information to

44Report of the Industry~ Task Force on Airport Capacity Improve-ment and Delay Reduction, op. cit., pp. 11-14.

Ch. 4—Technology ● 8 5

pilots in a clearly understandable fashion willpromote more efficient utilization of airfieldpavements.

Research and development are in progress onseveral aspects of marking and lighting. For exittaxiways, the major efforts are to improve thelighting pattern and the configuration, spacing,and orientation of components in a way that pro-motes ready identification of the exit and providesvisual guidance for safe and prompt transitionfrom the runway to the taxiway. Among the areasunder study are improved lighting and signing fortaxiway intersections, traffic control signals andlighting systems for ground guidance, and meth-ods for controlling lighting patterns and intensityfrom the tower. Development is also proceedingon new lighting techniques such as lights that uselow voltage electricity, light-emitting diodes, andelectroluminescent components to relieve some ofthe deficiencies of present lighting, which pilotscharacterize as “the blueberry pie maze. ”

To optimize the use of airport pavements andto make proper decisions related to safety, pilotsand controllers must have accurate and up-to-date

information on surface conditions that affect air-craft ground movement and stopping character-istics. Perhaps the most noticeable changes inthese characteristics are aircraft braking and stop-ping distance on wet or icy pavement, which areimportant not only from a safety standpoint butalso because of the effect on capacity.

One major effort is to devise pavement designsand surface treatments that will improve traction.Research is also being conducted on means to pro-vide information that will allow pilots and con-trollers to predict aircraft stopping capability andskid risk more accurately under various runwaysurface conditions. Items such as pavement sen-sors that continuously monitor pavement condi-tion and coefficients of friction are being exam-ined. Attention is also directed at developmentof better methods to convey this information tothe pilot and, ideally, to provide braking guidanceor warning of specific hazardous conditions andlocations. The primary concern is safety, but bet-ter information about pavement condition andaircraft performance when traction is reducedwould also yield a capacity benefit in that a moreaccurate delineation of safety limits might make

Photo credit’ Federal Aviation Administration

Night life at Chicago O’Hare

86 . Airport System Development— . — —

it possible to relax some of the present conserv-ative rules governing aircraft movement on thesurface in slippery conditions.

Apron and Gate Facilities

Opportunities to relieve airport surface conges-tion extend up to the parking spaces at the gates.Aircraft docking is typically accomplished by aramp agent with flashlights and hand signalsguiding the flight crew for proper parking of theaircraft and assuring that the wing tips have safeclearance from buildings, ground equipment, andother aircraft. New optical, electrical, electronic,and mechanical devices are being developed toprovide flight crews with positive visual guidancethat will permit more rapid and accurate dock-ing. This technology will allow apron space to beused more efficiently and help prevent the delaysthat arise when aircraft must be repositioned inorder to mate with fixed ground support systemsand passenger loading bridges.

While needs and procedures vary by airline andby airport, the aircraft servicing functions com-monly performed at an airport include fueling,engine start, galley and cabin service, electricalground power, towing, passenger stair or loadingbridge operation, and handling of baggage, mail,and cargo. In addition, various routine or specialaircraft maintenance functions are conducted.

Several technological advances offer reductionsin servicing time and cost. At some airports,ground power is now being provided by fixed sys-tems mounted on the passenger loading bridge orin underground pits. Similarly, fixed pneumaticsystems are being developed to provide groundpower and aircraft engine start. These installationsease the congestion caused by mobile units clus-tered around aircraft on the ramp and provide fora more efficient servicing operation. Auxiliarypower units now provided on most newer aircraftalleviate congestion by replacing ground equip-ment needed for electric service, air start, and air-conditioning. These self-contained units also assistin quick turnaround, thereby reducing gate oc-cupancy time. Special pallets and handling equip-ment provide for efficient transfer and loading of

bags and cargo. While use of this technology savestime at the gate, the loading and unloading of thepallets themselves can sometimes be time-con-suming due to mechanical problems and align-ment difficulties.

These improvements in technology help easesurface congestion in two ways, Those that speedturnaround lessen gate delays and enhance through-put. Those that reduce the apron space neededfor service vehicles and equipment allow more air-craft to be parked in a given area, thereby directlyincreasing apron capacity and helping to ease air-port surface congestion in general.

Terminal Facilities and Services

The airport terminal-the building itself and thepaved areas surrounding it on the airside and thelandside—is the zone of transition for passengers,providing the link between surface and air trans-portation. Design and operation of the terminalhave an influence on both airside capacity andground access and on overall throughput of theairport complex. This basic relationship, illus-trated in figure 11, dictates that the design of theterminal complex must reconcile the requirementsof three operational areas:

●

●

●

airside—where aircraft are serviced andpassengers board,terminal building—the collection point con-taining facilities for passenger processing andservices during transfer between airside andlandside, andlandside—the area accommodating groundtransportation (roadways, parking areas,etc.).

Basically, the terminal and associated landsidefacilities are long-term installations with relativelystable patterns of use. They are largely independ-ent of the specialized aircraft and airline passengerprocessing functions that occur on the airside. Incontrast, the airside is characterized by short-term, impermanent use which is closely tied tochanging aircraft technology with a useful life ofabout 10 to 15 years. The essence of airport ter-minal design is to strike an appropriate balance

Ch. 4—Techno/ogy . 87

AIRPORT PARKING

Spec!al Report 159, 1975”

between these somewhat contradictory require-ments.45

The principal effect of the terminal on the air-side is through the design of aprons and gates,which determines the number of aircraft that canbe accommodated at one time and the turnaroundtime for passenger boarding and aircraft servic-ing. As seen in the previous section, gate andapron operations can also have a wider—thoughnot major—effect on airside throughput. The im-

pacts of terminal design usually do not extendbeyond the apron and gate area, and terminalbuilding characteristics have scant influence onthe design of other airside components such astaxiways and runways.

Overall, the influence of the terminal on thefunctional requirements and performance of air-side facilities is relatively small compared with theinverse effect that the airside exerts on the ter-minal.4b The primary purpose of the terminal isto transfer passengers and their baggage betweensurface and air transportation with minimumtime, confusion, and inconvenience. The func-

4’Horn and Orman, op. cit.

25-420 0 - 84 - 7

gg . Airport System Development

tional requirements and choice of design for a ter-minal complex must take into account the pas-senger and baggage flows resulting from aircraftsize, traffic mix, schedules of operation, and typeof service provided (origin-destination or connect-ing flights). As a design task, this involves the in-tegration of three major parts of the terminal: air-side gates, passenger collection and service areas,and landside access and egress. Since these partsare highly interactive, it is important that theseparation between them be kept to a minimumand that traffic flow smoothly among the parts.

This would be a fairly straightforward taskwere it not for the need to design the airside in-terface so that it can be adapted to accommodatecontinually changing aircraft technology, airlineservice patterns, and traffic volumes. At somelarge hubs, the steadily increasing size of aircraftand their fixed-point servicing requirements, whencoupled with growing passenger and automobiletraffic, have led to terminal complexes of a sizethat imposes inconvenience and delay on passen-gers. In response, airport designers have beenforced to add an intermediate transportationmode within the terminal itself (moving sidewalks,transport buses, fixed rail systems, and other suchpeople movers) to aid passengers in transferringbetween the airside and the landside.47

The discussion that follows touches first on gen-eral questions of terminal building design and thenon technology of specific features that might beimproved to facilitate passenger movement or toreduce passenger inconvenience and delay. Itshould be recognized that these aspects of designand operation will have little, if any, effect on air-side capacity and throughput even though theymight lead to substantial reductions in the over-all trip time for air travel. It should also be rec-ognized that such matters have been of little in-terest to FAA or to policymakers in the FederalGovernment. They are, of course, keenly impor-tant to airport operators and—to a lesser extent—airlines because they constitute investment needsthat must be balanced against airside capacity ex-pansion in the overall program of capital improve-

“M. Brink and D. Maddison, “Identification and Measurementof Capacity and Levels of Service of Landside Elements of the Air-port,” in Airport Landside Capacity, op. cit.

ment for airports. Recent estimates indicate thatover half of the large hub airports are experienc-ing congestion and delay within terminal buildingsand that over 30 large and medium hubs are con-templating investments in terminal expansion orimprovement, with a total cost of $4 billion. 48 49

Terminal Building Design

Airport terminals can be grouped into four cat-egories according to their basic design concept:

●

●

●

●

centralized with finger piers—a common hallwith branching corridors leading to aircraftgates;centralized with satellites—a central con-course surrounded by small, separate clustersof gates and waiting areas, each connectedto the concourse by walkways or peoplemovers;linear or gate arrival—usually semicircularbuildings with ground access on one side andaircraft gates on the other, designed so as tominimize walking distance through the ter-minal; andtransporter— a compact passenger facilitywith buses or special vehicles used for trans-port to a remote aircraft parking apron.

These concepts are embodied in pure form onlyat a few airports which have been built on entirelynew sites. At most airports the design of the ter-minal building has evolved and been modified inresponse to traffic growth and local conditions,giving rise to a hybrid that incorporates featuresof two or more of the basic concepts (fig. 12). Atairports with land available adjacent to the ex-isting facility, the design has tended to evolve intoa finger pier arrangement, sometimes with sepa-rate unit terminals for commuter airlines or groupsof new air carriers for whom there is not roomin the main terminal. At airports where the ter-minal has grown to the limits of available landarea, satellite terminals and remote hardstandparking have typically developed. Transporterand satellite terminal concepts utilizing people-

Ch. 4—Technology ● 8 9

[ I

I J

[ 1

ii)r0n.(ncm

1=

SW ● Airport System Development

moving equipment have been adopted at some air-

ports to enhance the attractiveness of the terminal

for passengers since they eliminate the extremewalking distances associated with long piers ex-tending from central terminals. The transporterconcept has the additional advantage of allow-ing a small terminal building, free of the con-straints imposed by aircraft parking gates.

At a new site, the choice of terminal design islargely dependent on the volume and type of traf-fic expected. Centralized terminals are best for air-ports with a high proportion of transferring pas-sengers, especially those changing from one airlineto another. The gate-arrival design works well fororigin-destination passengers and commuter air-lines since it shortens the transit from the curb-front to the aircraft gate. The unit terminal withpassenger transporters can handle peaks of traf-fic efficiently, but only if the traffic is made uplargely of origin-destination passengers. In the ex-pansion of existing terminals, these same con-siderations come into play, but the choice maybe constrained by the design of the existing struc-ture, the available land, and the on-airport roadnet.

Misestimation of traffic volume or the type ofservice to be provided can sometimes render evena well-conceived design inefficient or inappro-priate. Dallas-Fort Worth Airport, for example,was planned with the expectation that origin-destination traffic would predominate. Since air-line deregulation, the growth of hubbing—whichtypically requires passengers to change planes atthe airport—has thwarted the effectiveness andconvenience of the design. At O’Hare, the needto adapt the concourses for passenger securityscreening has created long and circuitous routesfor transferring passengers. Efforts to encouragegreater use of Dunes Airport for short and medi-um-length domestic flights have been hindered bythe design of the terminal since the need to gofrom apron to terminal and back again by mobilelounges greatly increases the time and inconven-ience of interline connection. Kennedy Airport,planned with separate terminals for major airlines,is well-suited for origin-destination passengers andfor transfers to flights on the same airline, but veryinconvenient for interlining domestic passengers

and those coming in on international flights andcontinuing to other U.S. destinations.

Clearly, no single design is best for all circum-stances. Traffic patterns, traffic volume and flowcharacteristics (e.g., peaking), the policies of in-dividual carriers using the airport, and local con-siderations (e.g., esthetics and civic pride) dictatedifferent choices from airport to airport and fromone time to another. The airport planner, whois required to anticipate conditions 10 to 15 yearsin the future, must often resort to guesswork.Even if the guess is right initially, conditionschange—as the above examples illustrate—and re-sult in a mismatch between terminal architectureand the traffic to be served. To guard against this,airport planners now tend to favor flexible designsthat can be expanded modularly or offer the op-portunity for low-cost, simple modification asfuture circumstances may demand.

Terminal Services

These precautions, of course, are of little helpin terminals that have already been built for onetype of traffic but forced to accommodate another,or where demand outstrips capacity. Many air-ports will continue to suffer from inappropriateor outdated designs that lead to congestion anddelay in passenger areas and diminish the over-all utility of the airport as a transportation hub.For such airports, an alternative to a new or ex-panded terminal as an avenue of relief from con-gestion is to correct specific features that causebottlenecks by applying improved technology thatwill compensate for design inadequacies. Someof these partial technological remedies are dis-cussed next.

Passenger Movers

To speed passenger movement through the ter-minal and to lessen the inconvenience of walk-ing long distances to board flights or to reachlandside exits, some airports have turned to pas-senger movers. so Several technologies are avail-able, covering a broad spectrum of cost. They in-

Ch. 4—Technology . 91

elude buses, mobile lounges, moving sidewalks,and automated guideway systems. The choice ofany of these involves a tradeoff between theirservice characteristics and cost (capital and oper-ating) against those of adding new gates or ter-minal wings. This tradeoff is very sensitive to therate of use, the specific vehicle chosen, and thecost of gate construction. Passenger movers tendto be more cost effective than gates if the rate ofuse is high. Variation in traffic load is also im-portant, and analysis indicates that passengermovers are best suited to serving those locationsand intraterrninal trips where there is a great fluc-tuation in demand. 5l

Buses and mobile lounges add to airside sur-face traffic; they are also labor-intensive andtherefore costly to operate. For these reasons, air-ports with finger piers or satellite terminals havesometimes opted for automated vehicles such asmoving sidewalks or guideway transit systems.Moving sidewalks are not an entirely satisfactoryoption. They are costly to operate and maintain,and their speed must be slow to allow passengersto board and descend safely. Thus, they provideonly a marginal decrease in passenger movementtime, although they greatly reduce the effort oflong passages through the terminal complex.There is some experimentation with acceleratingdevices and transition techniques that would per-mit greater line speeds and still afford comfortableand safe boarding and descent. If these experi-ments are successful, the utility of moving side-walks will be greatly increased.

For longer distances or where the volume oftraffic is large, automated guideway systems aresometimes practical. Several different types areavailable, varying principally in terms of propul-sion, vehicle size, and complexity of the guidewaynetwork and control system. Reliability and traincontrol system design were problems in the firstsystems installed at airports (Dallas-Fort Worth,for example), but the technology has improvedrapidly and now appears to give good service atairports such as Atlanta and Orlando. Capitalcosts of vehicles and guideway construction re-main high, and they are still difficult and expen-

51 R. De Neufville, Airport Systems Planning (London: Macmillan,1976); pp. 118 ff.

sive to maintain. The view of airport designersis that these systems are cost effective only at afew very large airports, and there is reluctanceto utilize this technology except as a last resort.

Ticketing

The ticket counter serves three major functions:ticket transactions, baggage check-in, and flightinformation. Of these, the most time-consumingare ticket transactions (which often include bag-gage check-in for the individual passenger). Tech-nologies to speed ticket counter operations or toeliminate them altogether are being explored, bothto reduce delays in the terminal and to cut air-line personnel costs. Computerized ticket systemsavailable today offer passengers advance reser-vations and sales, preassignment of seats, andautomatic tagging of baggage. They will probablybe used more widely by the major air carriers,some of whom may also offer them to small car-riers under a service contract. A companion de-velopment is the computerized aircraft manifestthat has been implemented by some airlines. Thesesystems typically produce aircraft load sheets,passenger manifests, and automatic telex reser-vations. They greatly reduce the administrativework at the counter and expedite airline dispatchfrom the gate.

Ticket dispensing machines similar to thoseused for banking are now in limited use by someairlines at a few locations and for selected routes.Improvement of these machines so that they canhandle a larger number of routes and fare struc-tures could promote wider use, with correspond-ing reduction in the amount of activity that mustbe conducted at the ticket counter. This technol-ogy could also be extended to sale of tickets offthe airport property. With the deregulation oftravel agencies, the range of services provided bythese firms has expanded, offering passengers analternative to purchasing tickets at the airport.Travel agents now account for more than 60 per-cent of airline ticket sales in the United States. Theentry of mass-marketing firms such as Sears andTicketron into the air travel field may further de-crease the need for ticketing at airport terminals,reducing airline personnel and equipment require-ments, and alleviating congestion at terminalticket counters.

.

92 . Airport System Development

Baggage Handling

The handling of baggage, especially baggageclaim at the end of a flight, is a common and=for passengers—particularly onerous form of de-lay in terminals. At most airports, baggage han-dling is the responsibility of the individual air car-riers, but some airports operate a consolidatedbaggage service—either with airport personnel oron a contract basis—in the interest of speedingthe process and reducing the cost. Reduction ofthe delays and passenger inconvenience associatedwith baggage handling has been approached inthree ways: more efficient procedures for check-in and claim, automated handling and sorting,and elimination of some baggage handling by en-couraging carry-on luggage.

One of the simplest and most widely appliedmethods to expedite baggage handling is curbsidecheck-in. This separates baggage handling fromother ticket counter and gate activities, therebydisencumbering those locations and allowing bag-gage to be consolidated and moved to aircraftmore directly. Another method is replacement ofthe baggage claim carrousel with loop conveyorbelts that allow passengers greater access to theirluggage without increasing the size of the claimarea.

Sorting baggage, moving it to and from theapron, and aircraft loading and unloading aretime-critical and labor-intensive operations. Tech-nologies to improve this process include high-speed conveyors to transport baggage between theterminal and the flight line, often used in conjunc-tion with pallets or containers that can be put onand taken off aircraft with labor-saving equip-ment. Computerized sorting equipment, capable

“ of distributing bags with machine-readable tags,has been installed at some airports. These devicesare not yet fully satisfactory since the encodingand reading of tags are time-consuming and some-what unreliable.

To handle peak loads, automated systems musthave a larger capacity because they are less flexi-ble than manual systems. Redundancy is a mustwith an automated system, which increases thecapital cost. As these automated systems improveand come into wider use, a further step is to in-stall self-service systems that allow passengers to

check and claim luggage either in the terminal,at the curbside, or at remote locations on or offthe airport property. While such a developmentwould be primarily a labor-saving measure by air-lines and airport operators, it might also speedtransit through the airport for many passengers.

The functional equivalent of automated, self-service baggage handling systems—and one thatmay be cheaper and more reliable—is expandedcapacity within the aircraft for carry-on luggage.With the advent of stronger and lighter materials,aircraft designers have been able to reconfigurecabins to provide larger and more secure storagespace on board. New aircraft universally containsuch overhead storage bins, and many airlineshave converted older aircraft to incorporate sim-ilar enclosed overhead storage. A further devel-opment might be provision of a common baggagespace either within the cabin or in a special mod-ule that could be transferred to the cargo bay.Passengers entering and leaving the aircraft wouldpass through this space and handle their ownbaggage.

Passenger Security Screening

To deter aircraft hijacking, the Federal Govern-ment has established regulations to ensure safepassage for the traveling public. These regula-tions, implemented in January 1973, require secu-rity screening of passengers and carry-on articles.Over the past decade, security screening has be-come an accepted fact of life for air travelers anda problem for airport designers and operatorssince the security checkpoints tend to disruptpassenger flow and—in some instances—forceremodeling of the terminal.

The equipment used today consists of X-raymachines with moving belts and magnetometersfor metal detection. This system, which replacedmanual search, significantly increased the capacityand capability of the screening process. The chiefdrawback of the existing equipment is that, whileeffective in detecting metal, it has limited capa-bility to detect explosives and volatile substances.

New technology for screening cargo and bag-gage is being investigated. The aim is both tospeed the screening process and to increase thethoroughness and reliability of detection. The new

Ch. 4—Technology ● 9 3

Photo credit’ Los Angeles Department of Airpofls

Customs and immigration: once gracious . . .

systems under development make use of improvedbomb and explosive sensing techniques such asvapor detection, bulk detection, and computerizedtomography.

Federal Inspection Service

The United States has 24 airports of foreignentry where Federal Inspection Service (FIS) forclearing passengers and cargo is provided byCustoms, Immigration, and Agriculture officials.Clearance procedures are rigid and time-consum-ing, and FIS processing has been a major causeof delay at high-volume ports of entry.

The U.S. Department of State is now issuingmachine-readable passports that may help ex-pedite FIS clearance. Additional procedures andtechnologies are being investigated to achievegreater capacity, reduced clearance time, andhigher agent productivity. Alternative proceduresand physical arrangement of facilities are the prin-cipal areas of concentration.

The system employed at most airports of en-try today is the Customs Accelerated PassengerInspection Service (CAPIS), which provides sep-arate immigration and customs checkpoints.CAPIS is highly time-consuming for passengersand labor-intensive to operate. A new system, re-ferred to as One Stop, combines immigration andcustoms functions at a single station. Althoughpromising, this system has not yet achieved itsexpected capacity in tests and demonstrations.Chicago O’Hare and Houston IntercontinentalAirport are experimenting with another approachthat uses a modified version of the standard Euro-pean system known as “Red-Green,” where trav-elers who do not have goods to declare are sep-arated from those who do, with only the latterpassing through a secondary inspection station.Also under study are hybrid systems that com-bine features of CAPIS, One-Stop, and the “Red-Green” concepts.

LANDSIDE ACCESS

Photo credit: U.S. Depatiment of Transportation

. . . now streamlined

It is a truism that nearly every airplane trip the figures vary among airports, it is generallybegins and ends with an automobile ride, and estimated that over 90 percent of all airline pas-there is no clearer manifestation of our depend- senger trips to and from airports are by privateence on the automobile than at the terminal curb- automobile or taxi. At medium and small airports,side and on the access roads to the airport. While the figure is probably close to 100 percent since

— .

● Airport System Development

these communities tend not to have well-devel-oped public transit providing a practical alterna-tive to the automobile.

A further indication of the symbiosis betweenthe airplane and the automobile is the emergenceand growth of the car rental industry. This busi-ness has its origin in the need for air travelers tohave transportation to and from airports in cit-ies away from home. While many car rental firmshave since branched out into other markets, thebulk of their business is still rentals to airlinepassengers, and revenues from this activity area major source of income for airport operators.

Not all trips to the airport are made by airlinepassengers or those who come to meet travelersor drop them off. For airport workers (account-ing for perhaps one-third of all access trips) andcalls by delivery vans, service representatives, andothers with business on the airport property (alsoabout one-third of all access trips), the automobilelikewise predominates. Some (especially airportworkers) come at times when public transit is notavailable or when service is infrequent, and theyhave almost no alternative but to drive to the air-port and park.

At many airports, automobile traffic is a prin-cipal source of landside congestion and delay. Ofthe 33 major airports surveyed by the IndustryTask Force on Airport Capacity Improvement andDelay Reduction, the most common problemareas were at the curbside (20 airports) and onairport circulation and access roads (11 airports) .52Similar findings were obtained in a survey of air-ports performed for this assessment. Of the 39large, medium, and small hubs and commuter air-ports sampled, 23 indicated present or anticipatedproblems with parking, curbfront circulation, on-airport roads, or access routes. A recent reviewof airport problems by FAA found that 23 of 41major metropolitan area airports are sufferingfrom capacity constraints imposed by landsidecongestion or lack of adequate access.53

Perhaps the best known example of the effectthat landside access can have on airport opera-

52 Report of the Industry Task Force on Airport Capacity Improve-ment and Delay Reduction, op. cit.

53 Metropolitan Area Assessment Report, op. cit.

tions is at Los Angeles International Airport(LAX). Because of limited capacity of airport cir-culation roads and the inability of the freewaysand city streets near the airport to absorb a greatervolume of automobile traffic, regional transpor-tation authorities imposed a capon aircraft oper-ations and annual passenger volume permitted atthe airport. Much of the impetus for the recentexpansion at LAX was to relieve this landside con-straint, and a large share of the $700 million mod-ernization program now nearing completion therewas expended to double-deck roads leading to andfrom the terminal and to remodel the terminalcomplex so as to segregate arriving and depart-ing automobile traffic .54

LAX is not an isolated example. Chicago O’Hareis proposing a $1 billion program of airport mod-ernization, a large share of which will be to “bringaging and congested terminal and roadway facil-ities into balance with underutilized airside capac-ity. “55 St. Louis spent $78 million of the total $273million in funds programmed through 1983 onhighways and airport frontage roads on or adja-cent to the airport property.sb The Port Author-ity of New York and New Jersey has launched a$1.5 billion modernization plan for the three NewYork airports. Important parts of this plan arenew roadways and local transportation to im-prove airport access and additional parking spacearound the terminals. s’

Only a few landside improvements and airportaccess projects are eligible for Federal aid fromthe Airport and Airway Trust Fund. The FederalHighway Administration (FHWA) and the UrbanMass Transportation Administration (UMTA)also provide funds for landside development, andthe airport operator or local airport authority con-tributes an important share through retained ear-nings and revenue bonds. Funding of landsideinvestments is a complex multijurisdictional ar-rangement with wide variation from airport to air-

54B. Sweetman, "The New LAX Prepares 1984, ” hteravia, JUIY

1983, pp. 724-725.55 J. Ott, “$1 Billion Upgrade Planned at O’Hare,” Aviation Week

& Space Technology, Aug. 8, 1983, pp. 35-36.“J. Ott, “Expansion Eases St. Louis Congestion,” Aviation Week

& Space Technology, May 23, 1983, pp. 35-36.“E. Kozicharow, “New York Port Authority Boosting Airport

Capacity,” Aviation Week & Space Technology, May 9, 1983, pp.33-34.

Ch. 4—Technology ● 9 5

port. The capital improvements sponsored byFAA are limited to on-airport roadways, guide-ways, and walkways. Off the airport property,projects to improve landside access may receiveFHWA and UMTA grants or be supported byState and local fundss8 (see fig. 13).

In general, the solution to landside problemsdoes not appear to be new technology, but ap-plication of management techniques to make bet-ter use of the facilities available and constructionof new facilities (based on existing technology) toadd to landside capacity. In a larger sense, thereis also a need to look at the question of airportaccess from the perspective of the regional trans-— —

58A. J. Negrette, “Airport Landside and Off-Airport Interaction, ”in Airport Landside Capacity, op. cit.

portation system and to find ways to integrate theairport more effectively into the urban area itserves. The sections that follow focus on approachesthat can be taken or applied more widely toalleviate the problems of traffic flow on the air-port property and to reduce the cost and incon-venience of access from the surrounding metro-politan area.

Terminal Curbfront

The terminal curbfront provides temporaryvehicle storage during passengers’ transition be-tween the terminal and the landside, and it is atthe curbside that all passengers, except those usingnearby parking or transit facilities, either enteror leave some form of ground transportation.

Figure 13.—Federal Capital Funding of Airports and Related Facilities

J Bus facilities I—

o1

Nonurbanbusway

Airport boundary

I Parking

i

Qff?akpop ‘Mxi “$,,+

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b

❑ Funded by FHWA/UMTA

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Parking (1)

1 #

1-Z

On-airport roaduJ—cm~ .5: E

Busway ~ ~

tCargo

truck lane terminal

SOURCE: Transportation Research Board, Airporf Landslde Capacity, Special Report 159, 1975.

● Airport System Development

Curbfront congestion is a particularly difficultproblem to solve because the facilities there areintimately tied to the design of the terminal build-ing and airport characteristics such as activitylevel (peak passenger volume), user characteris-tics (mode of transportation, mix of passengersand well-wishers, and number of bags), and vehi-cle characteristics (type, number of passengers,and dwell time at the curb). The most practicalapproaches are physical expansion or modifica-tion of facilities and procedural changes to im-prove passenger and vehicle flow.

The most common forms of physical improve-ment are additional curbfrontage, bypass lanes,multiple entry and exit points in the terminalbuilding, remote park and ride facilities, andpedestrian overpasses or underpasses. These im-provements are intended to increase the utiliza-tion of curbfrontage by vehicular traffic or, in thecase of park and ride, to reduce demand on thecurbfront by diverting passengers from privatecars to high-volume vehicles. Walkways to seg-regate foot and vehicular traffic promote pedes-trian safety and facilitate roadway traffic by elim-inating conflicts between pedestrians and vehicles.

In some cases, procedural changes—either aloneor in conjunction with low-cost physical modifica-tions such as signing or lane dividers—are an ef-fective alternative to expensive construction orremodeling of the curbfront. For example, park-ing restrictions combined with strict enforcementwill reduce curbside congestion and dwell time indischarging and boarding passengers. Short-termparking islands or reserved sections along thecurbfront, defined by roadway marking or sim-ple dividers, may segregate vehicles picking upor discharging passengers from those that musthandle baggage or enter the terminal for brief er-rands. Similarly, separation of private cars fromtaxis, buses, and limousines can diminish conflictsamong these kinds of traffic and improve the flowto and from the curbfront. An effective approachat some airports has been provision of bus serv-ice from remote parking to the terminal and reg-ulations to discourage bringing private automobilesto the terminal building. None of these measuresis a substitute for adequate curbside capacity, butthey can lead to more efficient use of the facil-

ities available and perhaps compensate for defi-ciencies in terminal and curbfront design.

Airport Ground Access

Aside from expansion or improvement of theroad network leading to the airport, most effortto facilitate airport ground access has focused onsubstitutes for the automobile. Bus or airlinelimousine service has proved workable in somecities, but patronage is generally low because ofthe infrequency of service or the inconvenienceof getting between origin or destination and a cen-trally located bus terminal. Helicopter shuttle be-tween the airport and city center has been tried;but it is expensive, unreliable because of weather,and objectionable to the community because ofnoise.

A solution that has been advocated by manyplanners is a rail rapid transit system, either oper-ated exclusively to and from the airport or as partof a regional network. Cleveland, for example,built a rapid transit extension to Hopkins Inter-national Airport in 1968; and the Washington,DC, Metro system includes a station near, but notat, the main terminal at National Airport. Pro-posals to provide such service-either by con-struction of a new line to the airport or by link-ing an existing line to the airport by a feederbus—have been advanced for several other cit-ies. 59

In part, this interest has been stimulated by ex-amples in foreign countries, which either have orare planning rail service to airports. Paris Charlesde Gaulle Airport has a rail station a little overa mile from the terminal with connection providedby shuttle bus. Amsterdam (Schiphol), Birming-ham, Dusseldorf, Frankfurt, Gatwick, Heathrow,Orly, Vienna, and Zurich already have rail sta-tions in or immediately adjacent to the airport ter-minal. Cologne and Munich 2 will have such serv-ice by 1985. Haneda Airport in Japan has a monorail

. . . . . . . . . .59 A survey by the U.S. Aviation lndustry Working Group in 1979

found that eight U.S. airports-AtIanta, Baltimore-Washington In-ternational, Kennedy, Los Angeles International, Oakland, Miami,Ontario (California), and San Francisco—were considering someform of rail link. Of these, Kennedy and Oakland have establishedsuch service, but in both cases it is by a bus connection with transitstation off the airport property.

Ch. 4—Technology ● 9 7

line from the center of Tokyo to the terminal,which brings passengers to within 300 ft of check-in counters. Toronto and Montreal (Dorval) inCanada have rail lines that are close by but notintegral with the terminal (a connecting bus ortaxi trip is needed to complete the link), and Mon-treal International (Mirabel) will soon have directservice from the airport to the downtown areawith 13 intermediate stops. Figure 14, a cutawaydrawing of the Zurich airport, illustrates the con-cept of the integrated airport-rail complex.

De Neufville points out that rail transit is nota universal solution to the airport access prob-lem. ’” In most major U.S. cities, there is not a re-gional rail network to be tied into the airport; and,without it, there is little prospect that an exclusiveline between downtown and the airport would beviable. Few passengers want to travel between theairport and the central business district, and evenfewer want to go during rush hour. Rail transit,with its fixed routes and corridor structure, doesnot serve well in the U.S. setting, where there iswide dispersion of origins and destinations for air-port passengers. The capital costs of such systemsare likely to be high, and it is doubtful that oper-ating expenses could be covered from the fare box,necessitating subsidy from the municipality or theairport. There may be public resistance to build-ing a system to serve airport users exclusivelywhen other parts of the metropolitan area couldprofit perhaps more from rail rapid transit serv-ice. Finally, the service characteristics of rail tran-sit do not lend themselves particularly well to air-port trips. Passengers encumbered by baggagefind rail transit inconvenient because there is nostorage space on trains and narrow aisles may bedifficult to negotiate with luggage in hand. If thereare intermediate stops—as there almost certainly

6 0 D e N e u f v i l l e , o p . c i t . , p . 7 .

would be if the rail line attempts to serve morethan a few who want to travel from city centerto the airport— the trip is prolonged, and trainsmay be crowded with passengers riding for otherpurposes.

These arguments do not necessarily deny thevalidity of foreign experience, but they raisedoubts about the viability of rail transit access toairports in this country —where we do not havethe population densities, the existing urban railnetwork, and the tradition of public transit thatare characteristic of Europe and Japan.

An alternative to rail transit, which accom-plishes the same purpose but with greater flex-ibility and somewhat lower cost, is the remoteairline terminal (fig. 15). This is a facility for proc-essing arriving and departing passengers at a siteoff the airport property and transferring them tothe terminal by group transportation. The off-airport terminal may include facilities for ticket-ing, baggage handling, and parking. Connectionwith the airport can be provided by public tran-sit, special airport bus, or helicopter shuttle. Thetechnology to implement this concept exists, andit has been tried in several cities.

The popularity of the remote terminal concepthas waned in recent years, largely because indirectcosts tend to offset the benefits. Trip origins anddestinations are becoming more and more scat-tered throughout the urban area, to the extent thattrips to and from the city center now account forless than a quarter of airport patronage. On theother hand, the increasingly tighter restrictionson airport terminal and landside expansion maymake this concept worth reexamining, particularlyif a way can be found to build and operate a net-work of small dispersed facilities adapted to theurban-suburban pattern of business and residencein major metropolitan areas.

APPLICATIONS OF TECHNOLOGY

In the search for solutions to capacity and de- ●

lay problems, the value of new technology is ●

typically measured by its ability to achieve one ●

or more of the following results: ●

TO AIRPORT PROBLEMS

increased capacity,higher efficiency (or throughput),greater safety,improved reliability,

98 ●

Airp

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Syste

m

De

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pm

en

t

Figure 14.-Zurich Airport and Rail Terminal Complex

SOURCE: European Confererlce of Ministers of Transport, The Interlace Between Air and Land Transport in Europe, OECD Seminar Report, 1983.

Ch. 4—Technology . 99

Figure 15.—Off-Site Passenger Terminal Concepts

Airporf terminal

Airport terminal

Exclusiveairport transport

Helicopteraccess

Off site terminal

ProcessingI

Airport terminal

#

Connectingpassengers only

SOURCE: Airpoti Landside Capacity, Transportation Research Board, Special Report 159, 1975.

● greater accuracy, tance, but it has little relationship to capacity and● lower cost, and delay unless—as is often the case with procedures• greater convenience. and rules—the requirement for safety precludes

some measure for increasing capacity or through-The first two are direct benefits; they constitute put. Thus, if some new method of assuring safety

relief of the problem of how to accommodate a is found and it also allows a subsequent changehigher level of demand. Safety is of prime impor- in procedures or utilization of airport facilities,

. Airport System Deve lopment

safety improvements may give rise to a second-ary capacity-related benefit. Reliability, accuracy,cost, and convenience are operational benefits.They are worth seeking in and of themselves, butthey have little direct relation to capacity exceptinsofar as they are attributes that lead to adop-tion of new technology or hasten its implemen-tation.

The description of airside, terminal, and land-side technologies presented in the first part of thischapter has touched on all of these prospectivebenefits. The emphasis has been on their poten-tial to relieve capacity and delay problems, butother attributes have been cited where they ap-pear relevant either to the future use of the tech-nology or to the choice of one form of technol-ogy over another.

To provide additional perspective on the valueof new and emerging technologies from the stand-point of capacity and efficiency, OTA surveyeda sample of 54 airports to determine the natureof the capacity and delay problems they now faceor expect to face within 10 years. The survey alsoexamined specific technological remedies thatmight be applied at each airport. The results ofthis survey, presented below, should not be in-terpreted as a prescription for planning and im-plementation of new technology at these airportsor for the airport system as a whole. Rather, thesurvey attempts to show the general extent towhich technology can improve the capabilities ofthe airport system and relieve congestion anddelay.

No attempt is made to quantify the systemwidecapacity increase or delay reduction that mightresult from application of new technology. Thesebenefits are highly dependent on the operationalconditions and physical characteristics of the in-dividual airport. Although certain airports maybe similar in some respects, there is little basis forconcluding that what works at one will necessarilybe of the same benefit to others. Thus, the tabula-tion of technological measures considered appro-priate to the airports surveyed should be viewedsimply as a general map of the forms of reliefavailable and their possible application to theproblems at representative airports.

Capacity and Delay Problems atSelected Airports

The airports surveyed consist primarily oflarge, medium, and small hubs, cross-categorizedby the predominant type of traffic—long-, medi-um-, and short-haul. Also included are a few com-muter service, reliever, and general aviation air-ports. The sample was not scientifically drawnand stratified to represent the airport system asa whole. In choosing these 54 airports, the intentwas to include as many types as possible so asto indicate the general problems that airports face,but the focus was on those where congestion anddelay tend to be greatest and have the more pro-nounced effect on air transportation—hence, thepredominance of large and medium hubs in thesample.

Another consideration governing the choice ofairports was other recent studies of airport capac-ity and delay. The report of the Industry TaskForce on Airport Capacity Improvement and De-lay Reduction contained a survey of 33 major air-ports; 19 of these are included in the OTA sam-ple. A study of capacity and delay performed byFAA in 1981, examined 19 large airports, of whichthe OTA ‘sample includes 13.61 Another FAAstudy described airport problems in 41 metro-politan areas.b2 The OTA sample includes airportsin 27 of these metropolitan areas, although notalways the major airport or all the airports thatFAA examined in their survey of the region. Byoverlapping the OTA sample with these otherstudies, the intent was to provide a cross-referenceto these reports and an indication of the similarityof findings.

Table 15 indicates the nature of the capacityand delay problems found in the OTA survey.For each of the airports, deficiencies and bot-tlenecks in the following areas were identified:

● airspace,● airfield,● taxiway,● apron,

Ch. 4—Techt?ology ● 101

●

●

●

●

●

●

●

gates,terminal building,parking,curbfront,on-airport roads,off-airport roads, andenvironment and noise.

Entries in the table indicate whether problemsor limitations exist now (E) or are expected in thefuture (F). The most severe problem area is iden-tified by a dagger. In all cases, this informationwas obtained from published sources (FAA reports,airport master plans, regional transportationstudies, and the like), supplemented with tele-phone interviews to confirm the findings or to re-solve differences among the source documents.

One of the highlights of this survey is thatairspace and airfield problems are widespread andaffect airports of all sizes. Of the 30 large andmedium hub airports, 23 reported existing orfuture airside limitations. So, too, did 17 of the24 smaller airports—an indication that this formof capacity limitation is not solely a function ofthe size of the airport. Gate and terminal prob-lems, not surprisingly, are confined almost ex-clusively to larger airports served by major aircarriers.

Perhaps the most striking result of the surveyis that landside congestion and delay at the curb-front, in parking areas, and on circulation andaccess roads are of equal rank with airside prob-lems at large and medium hub airports. The samenumber of airports —23 large and medium hubs—cited the landside and the airside as problem areas.For 10 of these airports, the airside is or will bethe most severe problem; for 8 it is the landside.This suggests that efforts to relieve congestion anddelay should not focus entirely on the airfield andairspace. Landside access is also a pressing con-

cern. The point is even stronger if the terminalbuilding is grouped with the landside. The airsideis the most severe problem area at 10 large andmedium airports, while at 15 the problem is innonaeronautical areas.

Prospective Technological Solutions

To complete the analysis, an assessment wasmade of the various forms of technology thatmight be applied to remedy problems at the sam-ple airports. Table 16 lists the results. The spe-cific problem areas cited earlier in table 15 havebeen combined into four general categories: air-side, airport terminal, surface access, and envi-ronment and noise. Listed under these headingsare technologies that have the potential to relieveor mitigate capacity and delay problems at the54 sample airports.

Table 16 does not constitute a comprehensivelist of all technologies that might be applied, onlyOTA’S estimate of those that offer the greatestpromise or would be the most practical to imple-ment. Identification of a technology as applica-ble to a given airport does not necessarily implythat FAA or the airport operator plans to imple-ment it, nor that capacity and delay problemswould thereby be “solved. ” In some cases, the ca-pacity gains provided by these technologies willbe small, or they may provide benefits only incertain weather conditions or for a small part ofthe day. Thus, table 16 should be interpretedsimply as a general indication of how the tech-nologies described here can be related to a set oftypical airports. For those familiar with conditionsat these particular airports, table 16 may also pro-vide insights on the relationships among variousmeasures to increase capacity or to reduce delayand on the dynamics of airside, terminal, andlandside interactions.

.

102 ● Airport System Development

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Table 15.—Airport Capacity Survey (continued)

Auto On-airport Off-airport Environ/Airport Airspace Air f ie ld Tax iway Apron Gates Termina l park ing Curbf ront roads roads noise C o m m e n t s

Hartford Brainard, CT . . . . . . . . E,FKansas City Downtown, MO. . . —Mesa Falcon, AZ . . . . . . . . . . . . —

E,F – E,F – – – –— — — — — — —Et – E – E E –

——.

—

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E,F

— E,Ft—

Severe noise problems; landlockedAmple capacityNew runway to be built; hangar

facilities and fixed baseoperator space needed

Landlocked; adjacent land is tooexpensive; wetlands laws maypreclude further expansion

Airport saturated; no furthergrowth is projected; 74 dBAnoise limit

——

Novato, CA . . . . . . . . . . . . . . . . . E,F E,F E,F E,Ft – – – – E,F

Van Nuys, CA . . . . . . . . . . . . . . . — E— — — — — — — —

General aviation:Aurora, OR. . . . . . . . . . . . . . . . . . —Carlsbad, CA . . . . . . . . . . . . . . . . E,F

— — — — — —E,F E,F E,Ft = – – –

—— E,F

—

Landlocked; local ordinanceprohibits airport expansion

LandlockedNeeds parallel runway and

additional land; constrained bytwo other airports

Maior expansion ~roaram needed

Cincinnati Lunken, OH . . . . . . . —Greeley-Weld County, CO . . . . . E,F

F E E,F – – E,Ft –E,Ft – E,F – – E,F –

—. —

Vero Beach, FL. . . . . . . . . . . . . . — E,Ft E,F E,F – E,F E,F E,F E,F E,F——tMost severe problem.E = Problems or limitations are now being experienced in this area.F = Problems or limitations are anticipated for the future in this area.

SOURCE: Office of Technology Assessment.

Table 16.—Airport Technology Summary

Rank orderAirport by operatlonsa Airside Airport termmal Surface access Environmental/no6e

— — E,F Departure thrust management,preferential flight paths

Departure thrust management,preferential runway use,preferential fllght paths

Et Curbfront improvements, E,F Roadways, mass transportation, E,Ftermmal conftguratlon, FIS helicopter shuttleprocedures

E Curbfront Improvements, E Roadways, mass transportahon E,Ftermmal configuration

Preferenhal runway use,departure thrust management,preferenhal flight pathsDeparture thrust management,preferential runway use,preferential flight paths

E,F Curbfront Improvements, E,Ft Roadways, mass transportation E,Fterminal configuration

—.

Ch. 4—Technology . 105

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Chapter 5

OTHER APPROACHES TOREDUCING DELAY

.

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AdministrativeDiversion of

Options . . . . . . . . . . . . . . . . . . . . . . . .Traffic . . . . . . . . . . . . . . . . . . . . . . . . .

Balanced Use of Large Airports.. . . . . . . . . . . . . .Restriction of Access by Aircraft Type.. . . . . . . .Quotas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rehubbing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Economic Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Differential Airport Pricing . . . . . . . . . . . . . . . . . . .Slot Auctions.

Factors Affecting

Table

Table No.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the Use of Demand-Management

17. Application of Demandand Delay

Figure

Figure No.16. Activity at

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Solving Problems of Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the Top so Commercial Airports (ranked by air carrierfiscal vear 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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116116119

120

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122

111

Chapter 5

OTHER APPROACHES TOREDUCING DELAY

Airport congestion and delay are at least partlyamenable to technological solutions, but there areother approaches to dealing with the problem.Chronic delay is limited to a very few specifictimes and places, and one of the principal causesis the “peakiness” of traffic flow. Most travel isbetween a few major airports and at certain timesof day. While technological improvements andconstruction of new facilities can help airports ab-sorb growing traffic demand and lessen delay,these solutions are capital-intensive and may en-tail prohibitive costs. An alternative approach isto manage the demand to fit within existing ca-pacity.

There are two basic approaches to managingdemand, both with the same objective: to easecongestion by diverting some traffic to times andplaces where it can be handled more promptly orefficiently. This may be done through adminis-trative means; the airport authority or anothergovernmental body may allocate airport accessby setting quotas on passenger enplanements oron the number and type of aircraft operations thatwill be accommodated during a specific period.The alternative approach is economic—to struc-ture the pricing system so that market forcesallocate scarce airport facilities among competingusers. Thus, demand management does not add

capacity; it promotes more effective or economi-cally efficient use of existing facilities.

Any scheme of demand management deniessome users free or complete access to the airportof their choice. This denial is often decried as aviolation of the traditional Federal policy of free-dom of the airways and the traditional “first-come, first-served” approach to allocating the useof airport facilities. Economists reject this argu-ment on the grounds that it is a distortion of theconcept of freedom to accord unrestricted accessto any and all users without regard to the societalcosts of providing airport facilities. Attempts tomanage demand are also criticized for adverselyaffecting the growth of the aviation industry andthe level of service to the traveling public. Never-theless, as growth in traffic has outstripped theability to expand and build airports, some formsof demand management have already come intouse, and many industry observers, including theTask Force on Airport Access, have taken theposition that some form of airport use restrictionwill become increasingly important in dealing withdelay and in utilizing existing airport capacity effi-ciently.1

‘Report and Recommendations of the Airport Access Task Force(Washington, DC: Civil Aeronautics Board, March 1983), p. 21.

ADMINISTRATIVE OPTIONS

Several administrative measures could be adoptedto manage demand at individual airports or fora metropolitan region. Among these are: requireddiversion of some traffic to reliever airports, morebalanced use of metropolitan air carrier airports,restriction of airport access by aircraft type or use,and establishment of quotas (either on the num-ber of operations or on passenger enplanements).At the national level, demand might be managedby administrative actions to encourage “rehub-bing” or redistributing transfer traffic from busyairports to underused airports.

Diversion of TrafficIn some metropolitan areas, the shortage of air-

port capacity may not be general, but confinedto one overcrowded airport. There may be otherairports in the region that could absorb some ofthe demand. The Federal Aviation Administra-tion (FAA) lists 27 airports in the Chicago area,51 in the Los Angeles basin, and 52 in the Dallas-Fort Worth region. The vast majority of these air-ports are small and suited only for general avia-tion (GA) aircraft, but in some cases there is alsoan underutilized commercial service airport.

109

110 ● Airport System Development

The best regionwide solution to the problem ofdelay at a major airport may be to divert sometraffic away from the busy airport to either a gen-eral aviation reliever airport or a lightly used com-mercial airport. To some extent, this can occuras a result of natural market forces. When delaysbecome intolerable at the busy airport, users beginto divert of their own accord. While those whochoose to move to a less crowded facility do sofor their own benefit, they also reduce somewhatdelays incurred by users that continue to operateat the crowded airport. Public policy might en-courage this diversion through administrative ac-tion or economic incentives before traffic growthmakes conditions intolerable or necessitates cap-ital investment to accommodate peaks of demandat the busy airport.

Diversion of general aviation from busy air car-rier airports is often an attractive solution. GAtraffic, because it consists mostly of small, slow-moving aircraft, does not mix well with faster,heavier air carrier traffic. GA operators, them-selves, especially those flying for recreational ortraining purposes, want to avoid the delays andinconveniences (and sometimes the hazards) ofoperating at a major airport. These fliers areoften willing to make use of GA airports locatedelsewhere in the region if suitable facilities areavailable.

Diversion of GA traffic from commercial aircarrier airports has been taking place for manyyears. As air carrier traffic grows at a particularlocation, it almost always tends to displace GAtraffic. FAA has encouraged this trend by desig-nating 219 airports as “relievers” or “satellites” toair carrier airports, and earmarking funds espe-cially for developing and upgrading these air-ports. 2 Many other airports, although not specif-ically designated as relievers, serve the samefunction; they provide an alternative operatingsite for GA aircraft well removed from the maincommercial airport of the region.

‘Over the 10 years of the Airport Development Aid Program,about $140 million was designated for relievers. ‘The Airport Im-provement Fund sets aside almost $480 million for the period1983-87.

To be attractive to a broad spectrum of GAusers, a reliever airport should be equipped withinstrument approaches and provide runways ca-pable of handling the larger, more sophisticatedGA aircraft. In addition, users need facilities foraircraft servicing, repair, and maintenance as wellas suitable ground access to the metropolitan area.

Not all GA aircraft can make use of relieverairports. Some may be delivering passengers orfreight to connect with commercial flights at theair carrier airport. Others may be large businessjets that require the longer runways of a majorairport. Even at the busiest air carrier airports,GA traffic accounts for about 10 percent of totaloperations (see fig. 16).

In general, airport authorities do not have thepower to exclude GA as a class, although this hasbeen attempted on occasion. For example, in thelate 1970s the airport management and city gov-ernment of St. Louis attempted to exclude allprivate aircraft from Lambert Airport. This or-dinance was overturned by the courts as discrimi-natory.

Where they have had any policy on the mat-ter, local airport authorities have attempted tomake GA airports attractive to users by offeringgood facilities or by differential pricing schemes,This approach is most effective where the com-mercial airport and the principal reliever are oper-ated by the same entity. The State of Maryland,owner of Baltimore-Washington InternationalAirport, operates a separate GA airport, GlennL. Martin Field, and has a specific policy of en-couraging GA traffic to use it rather than the mainairport. The master plan for Cleveland HopkinsInternational Airport depends on the availabil-ity of the city-owned Lakefront Airport as a re-liever. If that airport should for some reason ceaseoperation as a GA reliever, Hopkins would ex-perience a great increase in traffic which mightnecessitate additional construction that is not nowplanned.

Most local airport authorities, however, do notoperate their own GA relievers. Some large air-port authorities plan and coordinate activitieswith nearby reliever airports operated by othermunicipalities or private individuals, but this hasnot been the general case. The system of relievers

Ch. 5—0ther Approaches to Reducing Delay ● 171

Figure 16.-Activity at the Top 50 Commercial Airports (ranked by air carrier operations, fiscal year 1982)

600

500 - 1 - 1

400

M

300

200

100

I1-5

I I I I 1 1 I I J6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50

Airport rank

in each region has tended to grow up without anyspecific planning or coordination on the regionallevel.

Development of GA relievers is not withoutproblems. These airports are also subject to com-plaints about noise, and they experience the samedifficulties as commercial airports in expandingtheir facilities or in developing a new airport site.Further, because many GA airports are small and

function just on the ragged edge of profitability,problems of noise or competing land use can ac-tually threaten the airport’s existence. The num-ber of airports available for public use in theUnited States has been declining. Between 1980and 1983, for example, the number of public-useairports declined from 6,519 to 5,897. Althoughmost of the airports that closed were small, pri-vately owned facilities, some industry observersworry that the Nation is irrevocably losing many

112 ● Airport System Development

potential reliever airports, just as it has becomeclear that they are vital.

Balanced Use of Large Airports

At the largest commercial service airports, GAactivity consists primarily of flights by large busi-ness and executive aircraft. This type of GA trafficaccounts for about 10 to 20 percent of the use ofmajor airports, a figure that many consider the“irreducible minimum. ” The delays that persistat these airports are primarily the result of air car-rier demand which can be satisfied only by anothercommercial service airport. In several metropol-itan areas, it is clear that the commercial airportsare not used in a balanced manner. For example,

San Francisco International is experiencing delayproblems while nearby Oakland Airport is under-utilized. Washington National is overcrowdedwhile Dunes International and Baltimore-Wash-ington International are looking for business.Newark is underutilized compared with busy LaGuardia and Kennedy. Similar pairs exist in Chi-cago (O’Hare and Midway), Dallas (Dallas-FortWorth and Love Field), and Houston (HoustonIntercontinental and Hobby). A policy designedto divert traffic from busy to underutilized air-ports would have a generally positive effect onthe ability of metropolitan areas to accommodateair traffic. Further, it might obviate the needfor expansion or expensive technological im-provements designed to reduce delays at the busyairport.

Photo credit: Aviation Division, County of Los Angeles

A threatened reliever airport

Ch. 5—0ther Approaches to Reducing Delay ● 113

Diverting air carrier traffic to alternate airportsis not a simple solution; there are a number ofproblems. One is simply the habits of the travel-ing public. People are accustomed to using thebusier airport. They may prefer the better groundaccess, the larger choice of flight times and desti-nations, the greater variety of carriers, and otheradvantages that the busy airport offers.

Air carriers, sensitive to public preferences, tendto concentrate their service at the busier airport,where they perceive a larger market. It is in thecarriers’ economic interest to serve the airportwhere passengers want to go. The busier airportis a known and viable enterprise, while the under-utilized alternate airport is a risk. Air carriers arejustifiably reluctant to isolate themselves from themajor market by moving all their service to theless popular airport. On the other hand, servingboth airports imposes an economic burden thatcarriers seldom choose to bear, as they would in-cur the additional expense of setting up and oper-ating duplicate ground services. In addition, split-ting their passengers between two airports mightmake scheduling of flights more complicated andlead to inefficient utilization of aircraft.

These obstacles have sometimes been overcomein locations where airport operators have theauthority to encourage a diversion of traffic fromone airport to another. For example, in the NewYork area the Port Authority of New York andNew Jersey operates all three air carrier airports.In theory, this gives the Port Authority the abilityto establish regulatory policies or economic in-centives to encourage the diversion of some traf-fic to Newark. In practice, however, measuresadopted to promote traffic redistribution have notbeen fully effective. The recent growth of trafficat Newark has been due primarily to new carriersentering the New York market and not diversionof established carriers.

In contrast, San Francisco and Oakland airportsare operated by separate sponsors. San Francisco,despite severe problems of delay, would rightlybe reluctant to encourage passengers and air car-riers to move to Oakland. Even though morebalanced regional airport use might be achievedand the long-range need for expansion at SanFrancisco reduced, the short-range effect would

be that San Francisco would lose revenues to acompetitor. There is no regional authority withthe power to promote this reallocation of traffic.

Restriction of Access by Aircraft Type

One means of diverting certain traffic from abusy airport to one with unused capacity is to re-strict access to the busy airport on the basis ofaircraft type or use. Restriction of aircraft accessto airports by size or performance characteristicsmight affect airport capacity and delay in severalways. First, the mix of aircraft using a runwaysystem helps to determine capacity. When aircraftare of similar size, speed, and operating charac-teristics, runway acceptance rate is greater thanwhen performance characteristics vary widely.Similar aircraft can be more uniformly and ac-curately spaced on approach and departure, therebysmoothing out irregularities in the traffic stream,which is a major factor causing delay. Thus, atairports where the bottleneck is in the runway sys- “tern, restrictions which narrow the range of air-craft using that system might have a beneficial ef-fect. Diversion of small GA or commuter aircraftto other airports or construction of a separateshort runway dedicated to their use could improvethe ability of the airport to handle larger trans-ports or the overall traffic mix.

A second implication of limiting access to spe-cific aircraft types is that it might reduce the needfor capital improvements required to accommo-date a larger variety of aircraft. For example,Washington National Airport does not acceptjumbo jet aircraft or long-range flights (nonstopflights in excess of 1,000 miles). FAA’s policy isto divert these flights to Dunes. Allowing largeraircraft into National would probably necessitatechanges in runways, taxiways, aprons, and gates.In addition, the larger number of passengers peraircraft would put additional strain on National’salready congested terminal and landside facilities,making a number of collateral improvements nec-essary.

Access restrictions at Washington National arecombined with a cap on passenger enplanements.Although the cap is still under debate, it is cur-rently set at 16 million passengers annually. (Na-tional currently handles 13 million. ) FAA consid-

114 . Airport System Development

ers the cap necessary because limiting aircraft size,without also setting a ceiling on the number ofpassengers, might lead to more aircraft operationsthan the airport can handle safely or efficientlyand worsen the congestion that already exists atNational.

The purpose of the access restrictions, the capon passengers, and the quota system (discussedbelow) is to divert traffic from National Airportto Dunes. Most local airport managers would notbe able to adopt such measures unless there werea nearby underutilized airport, also under theircontrol, to handle the diverted traffic. To forbidsome portion of the traffic to use an airport with-out an available alternative would most likely beconstrued as a restriction of interstate commerceor discriminatory practice.

Quotas

One technique of demand management now inuse at a few airports is the quota system—an ad-ministratively established limit on the number ofoperations per hour. Because delay increases ex-ponentially as demand approaches capacity, asmall reduction in the number of hourly opera-tions may have a significant effect on delay. Thismakes the quota an attractive measure for deal-ing promptly (and inexpensively) with airportcongestion.

Examples of airports with quotas are O’Hare,La Guardia, JFK, and Washington National—airports covered by the FAA high-density rule.The quotas at these airports were established byFAA in 1973 based on estimated limits of the airtraffic control (ATC) system and airport runwaysat that time. FAA is currently considering liftingthe rule at some of these locations because of im-provements made to airport facilities and slowerthan expected growth in air traffic. An exampleof a locally imposed quota is John Wayne Air-port in Orange County, CA, which limits sched-uled air carrier operations to an annual averageof 41 operations per day. This quota is based onnoise considerations as well as limitations on thesize of the terminal and gate areas.

During busy hours, demand for operational“slots” typically exceeds the quota. At the airports

covered by the high-density rule, the slots areallocated among different user classes. For exam-ple, at National, where there are 60 slots avail-able per hour, 37 are allotted to air carriers, 11to commuter carriers, and 12 to general aviation.During Visual Meteorological Conditions, morethan 60 operations can be handled, and aircraftwithout assigned slots may be accommodated atthe discretion of air traffic controllers and the air-port manager.

At airports where the quota system is in force,slots may be allocated in various ways—througha reservation system, by negotiation, or by ad-ministrative determination. The GA slots are gen-erally distributed through a reservation system—the first user to call in for a reservation gets theslot. However, for commuters and air carriers,the slots at the high-density-rule airports areallocated by negotiation. Two scheduling com-mittees, one made up of carrier representativesand one of commuter representatives, meet underantitrust immunity to negotiate the flights to beallotted to each user. If the negotiators fail toreach agreement (“default”), FAA reserves theright to allocate slots.

Under airline regulation, when the number ofcarriers and routes were fairly stable, the workof the scheduling committee was easy—merelyallocating the existing number of slots to the in-cumbent carriers. Since 1979, however, the com-mittees have had to accommodate new entrantsand the changing market strategies of incumbentcarriers. On several occasions since 1979, thenegotiators at Washington National have beenclose to defaulting, and FAA had to consider seri-ously using administrative means to distributeslots.

One objection to quota systems is that they tendto favor incumbents over new entrants. Anotheris that quotas allocate scarce slots without anyprice signals to show whether capacity is beingused efficiently; there is no long-range guide pro-vided by the market to show what improvementsmight be economically justified or which usersmost value their operating rights. These problemscan be partly overcome through selling or auc-tioning slots as discussed below.

Ch. 5—Other Approaches to Reducing Delay ● 115

Rehubbing

A systemwide response to alleviate delays atbusy airports is redistribution of operations toother, less busy airports in other regions. Someair carriers, especially those with a high propor-tion of interconnecting flights, may voluntarilymove their operations to underutilized airportslocated at some distance from the congested hub.Transfer passengers account for a large percent-

age of traffic at some large airports. About three-fourths of passengers at Atlanta, and nearly half

of passengers at Chicago, Denver, and Dallas-Fort

Worth arr ive a t those a i rpor ts mere ly to change

p l a n e s f o r s o m e o t h e r d e s t i n a t i o n . h e r e i s a nadvantage for carriers in choosing a busy airportas a transfer “hub’ ’-they can offer passengers aw i de var i e ty o f poss ib le connec t ions . Ho we v e r ,when the airport becomes too crowded, the costsof delay may begin to outweigh the advantagesof the large airport, and carriers may find it at-tractive to establish new hubs at smaller, less busyairports.

This “rehubbing” of the airport system is al-ready a trend (a subject to be examined furtherin ch. 8). Redistribution of operations has cer-tainly been facilitated by the deregulation of theairline industry, which allowed carriers greater

freedom in restructuring their routes. Medium-size airports appear to be receiving increased aircarrier activity since deregulation, and some car-riers are shifting their transfer operations to theseless congested facilities. For example, Piedmonthas developed Charlotte (North Carolina), Day-ton (Ohio), and Baltimore-Washington (Mary-land) as regional hubs. Western has developedSalt Lake City (Utah) as its principal hub. In ad-dition to relief from congestion, carriers who havemoved to less busy airports find another, perhapsmore compelling, advantage. Because there isoften little service by competing carriers at thoselocations, the hubbing carrier has greater controlof passengers, who can transfer only to depart-ing flights of the airline that brought them, notto a competitors.

While it is doubtful that rehubbing has actuallyreduced delay problems at major airports, it doesseem clear that development of transfer hubs atmedium airports has allowed for growth thatmight not have been possible had the carrierssought to concentrate their activities at the ma-jor hubs. Further, rehubbing has taken advantageof a certain “overcapacity” in the national airportsystem by making greater use of the facilitiesavailable at medium airports.

116 ● Airport System Development

ECONOMIC OPTIONS

Administrative limits on airport use—whetherby restricted access for certain types of aircraft,by demand balancing among metropolitan areaairports, or by selection imposition of quotas—offer the promise of immediate and relatively low-cost relief of airport congestion. As long-termmeasures, they may not be as attractive. Admin-istrative limits tend to bias the outcome towardmaintenance of the status quo when applied overa long period of time. Since the economic valueof airport access is not fully considered in settingadministrative limits, incumbents cannot be dis-placed by others who would place a higher valueon use of the airport. Further, incumbents and po-tential new entrants alike have no way to indicatethe true economic value they would place on in-creased capacity. Economists contend that a vitalmarket signal is missing and that airport opera-tors and the Federal Government cannot obtaina true picture of future capacity needs. Admin-istratively limiting demand, they say, creates anartificial market equilibrium that—over the longterm-distorts appreciation of the nature, quality,and costs of air transportation service that thepublic requires. Economists, therefore, favor ascheme of allocating airport access that relies onthe mechanism of price.

At present, price plays a rather weak role indetermining airport access or in modulating de-mand. Access to public use airports, except forthe few large airports where quotas are imposed,is generally unrestricted so long as one is willingto pay landing fees and endure the costs of con-gestion and delay. Landing fees, most often basedsolely on aircraft weight and invariant by timeof day, make up a very small fraction of opera-tional cost—typically 2 to 3 percent for air car-riers and even less for GA. Further, landing feesare not uniform from airport to airport. In manycases, landing fees are set so that—in the aggre-gate—they make up the difference between thecost of operating the airport and the revenues re-ceived from other sources such as concessions,leases, and automobile parking fees.3

3See ch. 6 for a more detailed examination of airport pricingmethods.

This leads economists to the conclusion thatlanding fees are somewhat arbitrary and do notreflect the costs imposed on the airport by an air-craft operation.4 Economists suggest that, by in-cluding airport costs and demand as determinantsof user fees, delay could be significantly reduced.The two most commonly advocated methods ofachieving this are differential pricing and auction-ing of landing rights.

Differential Airport Pricing

Many economists argue that weight-based land-ing fees are counterproductive because they donot vary with demand and, consequently, pro-vide no incentive to utilize airport facilities dur-ing offpeak hours. Further, they do not reflect thehigh capital costs of facilities used only duringpeak hours. Thus, economists contend, a moreeffective pricing method would be to chargehigher user fees during peak hours and lower feesduring offpeak hours. Theoretically, the net ef-fect of such a pricing policy would be a more uni-form level of demand.

Much of the traffic moved away from peakhours by higher landing fees would probably beGA. Correspondingly, the benefits of peak-hourfees would be greater at airports with a high pro-portion of GA activity. But, peak-hour fees couldalso be structured so as to affect the pattern ofair carrier activity. These charges would have tobe fairly high because landing fees represent onlya small fraction of air carrier operating costs andbecause increases can be passed on to passengers.

Despite increases in landing fees, carriers wouldwant to continue to use the airport at peak times,either to have access to a large number of pas-sengers or because long-haul scheduling problems

4The following, based on a survey conducted by Peat, Marwick,Mitchell & Co, in July 1982, is a sampling of aircraft landing feesat six airports:

1. Miami International—79a per 1,000 lb.2. Boston Logan International-$1.246 per 1,000 lb.3. Chicago O’Hare International-$1.095 per 1,000 lb.4. Denver Stapleton International–34c per 1,000 lb.5. Honolulu Internationa145c per 1,000 lb.6. Houston Intercontinental-85 .7~ per 1,000 lb.

Ch. 5—0ther Approaches to Reducing Delay ● 117

require them to serve a particular airport duringcertain hours. Thus, they would absorb some in-crease in landing fees, just as they absorb the costof delays, as part of the cost of doing business.However, some flights might be moved to offpeakhours if the charges were high enough. In fact,it is possible that properly structured peak-hourprices, if they were reflected in fares, could havean effect not only on the airlines’ scheduling pat-terns but on passengers’ travel habits as well. Ifsignificant savings were possible, some passengerswould choose to travel during offpeak hours.

It it is difficult to project accurately the changesin patterns of airport use that might be broughtabout by peak-hour surcharges. FAA has esti-mated that peak-hour surcharges, along with im-provement of the ATC system, would reduce an-ticipated air carrier delay costs by approximately80 percent at the Nation’s 25 busiest airports overthe next 25 years. 5 A recent Congressional BudgetOffice (CBO) report suggests that, although ex-pansion may be inevitable at many airports, peak-hour surcharges could significantly delay the needfor expansion and reduce financial pressure at anumber of airports. b Another important aspectof peak-hour surcharges noted by CBO is that,even if they do not reduce traffic levels at peakhours to the desired levels, they could provide air-ports with increased revenues to expand facilitiesand, consequently, to reduce delays.

Some observers reject this line of reasoning.They contend that, to be effective in shifting de-mand to slack periods, peak-hour charges wouldhave to be set so high that they would be politi-cally unacceptable. Further, there is no assurancethat airlines would not average the higher costsof peak-hour access at certain airports with thelower cost at other times and places and pass thisalong to all passengers as a general fare increase.Airlines would thus create an internal cross-sub-sidy in their fare structure to cover the higher costsof access to some airports. Since the average fareincrease would likely be small, the economic

5Policy Analysis of the Upgraded Third Generation Air TrafficControl System (Washington, DC: Federal Aviation Administra-tion, January 1977), p. 71.

bPublic Works Infrastructure: Policy Considerations for the 1980s(Washington, DC: Congressional Budget Office, April 1983), p. 113.

Photo credit; Federa/ Aviation Administration

Competition

signal to the public would be diminished such thatit would have scant effect on travel behavior.

A major problem with the concept of peak-hoursurcharges is how to determine the level of sur-charge. One widely advocated method is to chargethe airport user the full marginal costs of airportfacilities. In other words, each airport user paysa share of the additional capital and operatingcosts to the airport authority of providing serv-ice at the time demanded. For example, if a userlands at an airport during a period of peak de-mand where two or more runways are necessaryto handle the traffic, the charge should includea contribution to the cost of building, operating,and maintaining those additional runways. Onthe other hand, if the user lands during an off-peak hour when the one runway in use is notsought by others, there would be no additionalcharge. While both onpeak and offpeak userswould pay fees to cover maintenance, wear andtear, or other costs, only peak-hour users wouldpay the additional costs associated with the timeof use. The resulting user fees would be directlyrelated to the levels of airport activity, produc-ing the desired effect of higher fees during peakhours and a strong price signal to use the airportat offpeak hours.

Some contend that a system of marginal costpricing should be based on the delay costs whicheach peak-hour user imposes on other users. Forexample, during peak hours, airport users would

118 ● Airport System Development

be charged a fee based on the delay costs associ-ated with their operations. This creates a systemof user fees where the fees become progressively

larger as delays increase. Proponents contend that

using marginal delay costs as the basis for pric-ing a i rpor t access provides a s t ronger incent ive

for off-peak airport use than a scheme based onmarginal facility costs alone.

Implementing a policy of differential pricing—whether based on marginal facility cost, marginaldelay cost, or some purely arbitrary scheme—isdifficult. It is likely that a significant increase inairport user fees will raise questions of equity.Higher fees might be more burdensome for smallairlines and new entrants than for established car-riers. There are a number of examples where air-port operators have attempted to increase user feesand been challenged by air carriers and generalaviation. In some cases, air carrier landing feesare established in long-term contracts that can-not be easily changed.7

GA users often contend that differential pric-ing is discriminatory because it favors those withthe ability to pay and illegal because it denies theright to use a publicly funded facility. Economistsrebut this argument by pointing out that time-of-use price is neither discriminatory nor illegal solong as price differences reflect cost differences andthat it is fair and just to set prices based on thecosts that each user imposes on others and onsociety generally.

Despite the difficulties inherent in increasing air-port user fees, there are two well-documented ex-amples of differential pricing policies that havebeen in effect for several years. In the early 1970s,the British Airport Authority implemented peak-hour surcharges at London’s Heathrow Airport.In the late 1960s, the Port Authority of New Yorkand New Jersey began imposing peak-hour sur-charges on general aviation. Both differential pric-ing policies sought to move traffic to offpeakhours, even though the pricing methods employedwere considerably different.

71n 1981, the Indianapolis Airport Authorities brought suit againstsix airlines for refusing to pay new landing fee rates. The court, even-tuaI1y, decided in favor of the airlines, ruling that the rate increasewas unreasonable. In 1976, a court in North Carolina ruled thatthe Raleigh-Durham Airport couId only raise its landing fees to 22.3aper 1,000 lb instead of the proposed 33 to 35¢ per lb.

Because of the large volume of internationaltraffic, activity at Heathrow increases significantlyduring the summer months, compounding delayproblems. As a result, the surcharges imposed atHeathrow in 1972 were set on both an hourly andseasonal basis. The hours of greatest delay werefrom 8:00 a.m. to 1:00 p.m. During the summer,surcharges were applied for the entire S-hourperiod each day. During the remaining months,surcharges were levied only for the period be-tween 9:00 and 11:00 a.m., Monday throughFriday. The effects of peak-hour surcharges atHeathrow were not clear cut. During 1972 and1973, there was an apparently steady movementof traffic away from peak periods. This trend,however, was reversed in the following year andfluctuated thereafter, leaving some doubt as to theeffectiveness of the surcharges.

The surcharges imposed by the Port Author-ity of New York and New Jersey were aimed spe-cifically at general aviation using of the threemajor commercial airports in the New York met-ropolitan area. During July 1968, 17 percent ofall aircraft operations at the three commercial air-ports were delayed by more than 30. minutes.8During that same month, GA traffic constituted25 percent of the airport traffic—30 percent dur-ing peak hours. In an effort to shift this GA traf-fic away from peak hours, the Port Authority in-creased the landing fee for aircraft with fewer than25 seats to $25 during peak hours—a fivefold in-crease. The fee remained at the $5 level duringoffpeak hours.

Peak-hour surcharges produced significant re-sults at all three New York airports. Followingthe imposition of the surcharges, GA activity dur-ing August and September decreased 19 percentoverall and 30 percent during peak periods. Moreimportant, delays—in terms of the percentage ofaircraft operations experiencing delays of over 30minutes—declined markedly.

To be sure, there are factors other than sur-charges that affect airport use; and, undoubtedly,some could have influenced the outcomes in bothNew York and London. For example, the fuel

8Port Authority of New York and New Jersey Memorandum,Aviation Department, “Effects of FAA Allocations, Summer 1969,”Nov. 20, 1969.

Ch. 5—Other Approaches to Reducing Delay ● 119

crisis of 1973 unquestionably influenced the traf-fic at Heathrow and masked somewhat the effectsof the surcharge. A controller slowdown at NewYork’s airports during the summer of 1968 inten-sified delay problems and could have accountedfor some of the traffic diversion attributed to thesurcharges.

In general, peak-hour surcharges represent anattempt to manage demand by charging cost-based landing fees. Access to airports is not lim-ited except by the user’s willingness to bear theadditional cost imposed during peak hours.Another method of reducing peak-hour airportactivity involves limiting airport access througha process by which landing rights (slots) are auc-tioned to the highest bidder. The auction is a hy-brid process—partly administrative, partly econo-mic—in which access is regulated, but the rightof access is distributed through a market-orientedmechanism.

Slot Auctions

Slot auctions have been advocated as the bestmethod of allocating scarce airport landing rightson the grounds that, if airport access must belimited, it should be treated as a scarce resourceand priced accordingly. The method to accom-plish this is a system whereby the price of airportaccess is determined by demand. Slot auctionsallow peak-hour access only to those users will-ing to pay a-market-determined price.

Slot auctions are particularly unpopular withnew air carriers, who feel that they would be in-hibited in serving new markets or perhaps ex-cluded altogether. These earners contend that auc-tions would place them at a disadvantage withincumbent airlines, which could hoard slots and,potentially, limit competition.

There are several practical problems in imple-menting slot auctions. First, there is the questionof who should actually organize the auction—the local airport authority or the Federal Govern-ment. Local authorities are probably in the bestposition to determine accurately the number ofavailable slots, but some experts argue that theFederal Government has a systemwide perspec-tive that is better suited to determining the over-

Photo credit: Federal Aviation Administration

slots

all effects of slot allocations on airport traffic na-tionally.

A related problem is who should receive theproceeds of the auction. Some contend that theproceeds should be turned over to the airportauthority, which bears the burden of operatingthe facility and making necessary capital improve-ments and maintenance outlays. Others arguethat, like other user fees, funds raised by auctionsshould be placed in the Airport and Airway TrustFund and distributed as needed for airport capi-tal projects. A novel approach, advanced by thePort Authority of New York and New Jersey, isthat funds obtained from peak-hour slot auctionsshould be distributed to airlines operating offpeakthereby providing them an incentive to offer serv-ice at such times. g

‘J. Ott, “U.S. Reviews Airport Slot Policy," Aviation Week &Space Technology, Apr. 16, 1984, pp. 32-33.

2 5 - 4 2 0 0 - 8 4

120 . Airport System Development

Another problem is the status of the slots oncethey have been auctioned. One view is that theybecome the property of the airlines, to be boughtand sold at will. Another is that they should re-main the property of either the local airport au-thority or the Federal Government, which couldretain control over the transferal of slots throughanother auction.

Finally, there is the special problem of inter-national users who need to gain access to Federalimmigration and customs facilities, which are

available only at certain airports. If an aircraftentering the United States is required to clearcustoms and immigration and can do so conven-iently only at an airport with slot restrictions,equity would appear to dictate that access be af-forded, and at no additional cost. On the otherhand, such aircraft are using a valuable com-modity for which others must compete and pay,and there is little economic justification in distin-guishing between domestic and foreign flightssince both impose equal cost on the airport at thetime of use.

FACTORS AFFECTING THE USE OFDEMAND= MANAGEMENT ALTERNATIVES

The demand-management techniques enumer-ated above could, in theory, reduce delay. Somehave actually been tried, with mixed results. How-ever, there are factors that may affect the abilityof airport operators or the Federal Governmentto implement them on a wide scale.

Some argue that regulations restricting airportaccess are unconstitutional because they interferewith interstate commerce and abridge the rightof access for some users. Many industry observersshudder to think that the kinds of access restric-tions in effect at National Airport might becomecommon at major airports. Determination ofwhether they would be an undue burden is adelicate matter which must be decided on a case-by-case basis, depending on the parties involved,the location of the airport, and its importance tothe national system. FAA itself does not appearto encourage the spread of quotas and otherrestrictions imposed by airports, operators, eventhough they are in use at federally owned Wash-ington National Airport. For example, FM con-tested the imposition by John Wayne Airport ofa perimeter rule forbidding the operation of long-range flights.

Deregulation has made the allocation of slotsthrough negotiation a more difficult process, asthe scheduling committees must constantly ac-commodate new entrants or changes in incumbentcarriers’ levels of service. The Civil AeronauticsBoard’s Task Force on Airport Access has notedthat scheduling committees are capable of discrim-

inating against new entrants and cautioned thatthe whole negotiation process might be anticom-petitive.l”

Policies to encourage development of relieverairports or more balanced utilization of airportsin metropolitan regions are unlikely to be imple-mented in locales where airports are competitorsand not operated by the same sponsor. Congresshas attempted to address the regional implicationsof airport development in its mandate for FAAto develop a National Plan of Integrated AirportSystems. It remains to be seen whether this plan-ning document, or any other action at the Fed-eral level, can improve regional coordination ofairport facilities.

The basic theory of demand-related airport ac-cess fees and the general principle that fees shouldbe proportional to marginal delay costs are wellunderstood. It is also commonly acknowledgedthat the present scheme of pricing services, espe-cially at congested airports, is far from economi-cally efficient. However, market-related approaches,such as peak-hour pricing and congestion sur-charges, may be difficult to implement, and theyare likely to encounter stiff opposition from someclasses of users, especially GA. Despite thetheoretical attractiveness of marginal-cost pricing,it maybe difficult in practice to determine the truemarginal cost of a landing or a takeoff. There are

Ch. 5—Other Approaches to Reducing Delay ● 121

analytic problems and policy issues to be resolved,as well as the underlying question of whether eco-nomic efficiency should be a primary goal of air-port management. Several years of experimenta-tion might be needed to establish the most effectivefee structure for controlling delay and coveringairport costs.

There are some dangers inherent in these ex-periments. It is possible that, in a deregulatedenvironment where carriers are frequently chang-ing routes and levels of service, airports wouldbe unable to determine the effects of their experi-ments or to guard against unpredictable (andundesirable) side effects on the airline industry oron other airports. The process of diverting air car-rier operations to offpeak might be self-defeatingfor some airports. Rather than schedule operationsin slack hours at airports that they perceive asmarginal, carriers might prefer to move out of theairport altogether. While this might be a desirableeffect from the system perspective, it would bethe opposite for the airport operator, who wouldlose revenue.

Further, in order to be effective in shifting aircarrier traffic to offpeak hours, landing fees dur-ing peak hours might have to be raised substan-tially. In many cases, use agreements between aircarriers and airports would prevent such radicalchanges in fees. If it were determined to be in thenational interest for airport operators to makesuch changes in their fee structures, the FederalGovernment might have to take action to abro-gate or modify existing use agreements. On theother hand, some believe it is unwise for the Fed-eral Government to become so directly involvedin the pricing decisions of individual airports.

Economic policies or administrative actions toreduce GA traffic at congested major airportscould have two effects. The intended effect wouldbe diversion of some GA traffic to other nearbylanding places. However, for some types of air-craft and for some GA users, there will be no otherfacility as suitable as the main air carrier airport;and they would have to pay the cost if they wishto continue using it. Alternatively, some usersmight find the monetary cost or inconvenience toohigh and choose to use commercial flights ratherthan continuing to operate their own aircraft.

The sale or auction of slots is controversial withregard to ownership and the right of sale. The con-fusion over slots following the Braniff bankruptcyis a case in point .11 At that time, FAA’s post-strikecap on operations was in effect at 22 airports, andBraniff argued that their assigned slots were assetsthat had monetary value which should accrue tothe airline. FAA’s position was that the slots wereunder FAA control. (FAA did in fact reassignthose slots to other carriers on an emergency basisafter Braniff stopped flying. ) From the airportoperator’s point of view, however, slots representthe essential attributes of the airport, namely run-way time and space. If they are determined to beproperty at all, the airport operator would arguethat they belong to neither FAA nor the carriers,but to the airport.

A 1981 FAA report illustrates the general bene-fits of demand management.’2 The report exam-ined projected demand and traffic mix at the 39busiest air carrier airports to determine those withfuture capacity problems and to identify remedialmeasures that could be applied to alleviate delay.About half (19 of the 39 airports studied) wereexpected to face serious delay problems by 1991.Analysis of the traffic mix at these airports iden-tified seven with a high proportion of GA traf-fic, and FAA concluded that demand-manage-ment techniques aimed at diverting GA to offpeakhours or to reliever airports could obviate the needfor new construction to expand capacity.

At four other airports, a different form of de-mand management offered potential relief. Eachof the four (San Francisco, Dallas-Fort Worth,Chicago O’Hare, and Washington National) hasanother nearby airport with underutilized capa-city. By shifting some peak-period traffic (air car-rier and GA) to these alternate airports, capitalimprovements at the overcrowded airport couldbe avoided. The results of this analysis, sum-marized in table 17, indicate that demand man-agement could eliminate or substantially reducecapital expenditures for new capacity at 11 of the

122 Airport System Development

Table 17.—Application of Demand Management to Soiving Probiems of Capacity and Deiay

Airports where diversion of GA could relieve congestion

Operations forecast, Percent1991 (Xl,ooo) PANCAPa Air-carrier/ operations in

Airport Air carrier GA (Xl,ooo) PANCAP ratio 3“ peak hoursHouston . . . . . . . . . . . . . . . . . . . 316 185 300 1.05 24Las Vegas . . . . . . . . . . . . . . . . . 254 296 330 0.77 28Memphis . . . . . . . . . . . . . . . . . . 288 287 355 0.81 30Oakland . . . . . . . . . . . . . . . . . . . 201 585 595 0.34 NAb

Phoenix . . . . . . . . . . . . . . . . . . . 195 276 330 0.59 27San Diego . . . . . . . . . . . . . . . . . 137 98 180 0.76Santa Ana . . . . . . . . . . . . . . . . . 353 565 385 0.92 l % ’Ahports when? dlverslon of traffic to another iocai airport couid relieve congestion

Operations forecast,1991 (Xl,ooo) Percent

PANCAPa Air-carried operations in AlternateAirport Air carrier GA (Xl,ooo) PANCAP ratio 3 peak hours airportChicago O’Hare. . . . . . . . . . . . . 965 60 616 1.57 24 Chicago MidwayDallas Fort Worth . . . . . . . . . . . 620 20 340 1.82 26 Dallas Love FieldSan Francisco . . . . . . . . . . . . . . 478 29 400 1.20 24 OaklandWashington National . . . . . . . . 399 117 275 1.45 21 Dunes, Baltimore-

WashingtonInternational

Airports requiring additional capacity by 1991

Operations forecast,1991 (Xl,ooo)

PercentPANCAPa Air-carrier/ operations in

19 major airports expected to have high levels ofdemand by 1991.

The FAA findings lend credence to the generalnotion that demand management, either by ad-ministrative or economic means, is worthy of con-sideration as an alternative to capital investmentin new capacity and to technological approachesto reduce delay. The attractiveness of the conceptstems in part from the fact that demand manage-ment can be implemented in far less time than ittakes to construct new facilities or to install newtechnology. On the other hand, it must be rec-ognized that demand management would be con-troversial. Administrative measures to redistributedemand would be viewed by many in the avia-tion community as an arbitrary and unwarrantedexercise of government power, either Federal or

local. Pricing schemes such as marginal-cost pric-ing or slot auctions would be scarcely more pal-atable to users accustomed to low-cost and unre-stricted access to airports. Either approach wouldbe such a sweeping departure from traditional pol-icy that aircraft operators forced to shift theiractivities to other airports or times of day wouldbe likely to resist on the grounds of discrimina-tion or undue hardship. Airport operators, them-selves, would also be reluctant to venture into anarea where there is so little experience to guidethem and where analysts and economic theoreti-cians cannot predict the benefits and risks exceptin general and carefully qualified terms. Still, fromthe standpoint of efficient use of existing resourcesand avoidance of large new capital investment,demand management is an option worthy of seri-ous consideration and experimentation.

Chapter 6

AIRPORT FINANCIALMANAGEMENT AND PRICING

Photo credit: Federal Aviation Administration

Contents

PageApproaches to Financial Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . 125

The Residual-Cost Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125The Compensatory Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126Comparison of Residual-Cost and Compensatory Approaches . . . . . . . . . . . . . 127Pricing of Airport Facilities and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129Structure and Control of Airport Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131Variation in the Source of Operating Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Trends in Airport Management Since Deregulation . . . . . . . . . . . . . . . . . . . . . . . . . 135Shorter Term Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135Modifications of Residual-Cost Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136Maximization of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

List of TablesTable No. Page18.19.

20.

21.22.23.

Financial Management of Commercial Airports, 1983 . . . . . . . . . . . . . . . . . . . 126Comparison of Residual-Cost and Compensatory Methods ofCalculating Airport Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127Role of Airlines in Approving Capital Projects atCommercial Airports, 1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128Term of Airport Use Agreements at Commercial Airports, 1983 . . . . . . . . . . 130Profile of Landing Fees at Four Major Airports, 1982 . . . . . . . . . . . . . . . . . . . 132Average Operating Revenue by Revenue Source, Commercial andGeneral Aviation Airports, 1975-76 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

Chapter 6

AIRPORT FINANCIALMANAGEMENT AND PRICING1

Unlike airports in other countries, many ofwhich are owned and run by national govern-ments, U.S. commercial airports are typicallyowned and managed by local governments orother non-Federal public authorities. Although themanagement approach varies, major U.S. com-mercial airports function as mature enterprises,applying up-to-date techniques of financial man-agement and administration. These publicly ownedand managed facilities are operated in conjunc-tion with private industry-the commercial air-lines, which are the airports’ link to their patrons.This peculiar public-private character distinguishesthe financial operation of commercial airportsfrom that of wholly public or private enterprises,

distinctly shaping airport management practices,the pricing of facilities and services, and the in-vestment planning process.

On the basis of a survey conducted by the Con-gressional Budget Office (CBO) in 1983 (app. B),this chapter develops a profile of financial pol-icies and practices now followed at 60 of the Na-tion’s larger commercial airports and assessestrends in airport financial management since Fed-eral deregulation of the airline industry in 1978.Brief attention is also given to management andfinancing practices of smaller airports, includingpublicly owned general aviation (GA) airports.

APPROACHES TO FINANCIAL MANAGEMENT

At most commercial airports, the financial andoperational relationship between the airport oper-ator and the airlines is defined in legally bindingagreements that specify how the risks and respon-sibilities of running the airport are to be shared.These contracts, commonly termed “airport useagreements, ” establish the terms and conditionsgoverning the airlines’ use of the airport.2 Theyalso specify the methods for calculating rates air-lines must pay for use of airport facilities and serv-ices; and they identify the airlines’ rights andprivileges, sometimes including the right to ap-prove or disapprove any major proposed airportcapital development projects.

Although financial management practices dif-fer greatly among commercial airports, the air-— —

IThis chapter was prepared by the Congressional Budget Officeand appears in unabridged form in Financing U.S. Airports in the1980s, April 1984. The version here has been condensed and editedto conform to the OTA report format.

“’Airport use agreement” is used generically hereto include bothlegal contracts for the airlines’ use of airfield facilities and leasesfor use of terminal facilities. At many airports, both are combinedin a single document. A few commercial airports do not negotiateairport use agreements with the airlines, but instead charge ratesand fees set by local ordinance.

port-airline relationship at major airports typicallytakes one of two very different forms, with im-portant implications for airport pricing and in-vestment:

The residual-cost approach, under which theairlines collectively assume significant finan-cial risk by agreeing to pay any costs of run-ning the airport that are not allocated toother users or covered by nonairline sourcesof revenue.The compensatory approach, under whichthe airport operator assumes the major finan-cial risk of running the airport and chargesthe airlines fees and rental rates set so as torecover the actual costs of the facilities andservices that they use.

The Residual-Cost Approach

A majority of the Nation’s major commercialairports surveyed by CBO—14 out of 24 large air-ports and 21 of 36 medium airports—have someform of residual-cost approach to financial man-agement (see box A and table 18). Under this ap-proach, the airlines collectively assume significant

125.

126 . Airport System Development

financial risk. They agree to keep the airportfinancially self-sustaining by making up any defi-cit—the residual cost—remaining after the costsidentified for all airport users have been offset bynonairline sources of revenue (automobile park-ing and terminal concessions such as restaurants,newsstands, snack bars, and the like).

Although applications of the residual-cost ap-proach vary widely, a simplified example can il-

Table 18.—Financial Management ofCommercial Airports, 1983

Large MediumApproach Number Percent Number Percent

SOURCE: Congressional Budget Office, 1963 Survey.

lustrate the basic approach (see table 19). Mostairports have a number of different cost centers,such as terminal buildings, the airfield, roads andgrounds, and the air freight area. At a residual-cost airport, the total annual costs—includingadministration, maintenance, operations, anddebt service (including coverage) —could be cal-culated for each cost center, and offset by allnonairline revenues anticipated for that center.3

The residual between costs and revenues wouldthen provide the basis for calculating the ratescharged the airlines for their use of facilities withinthe cost center. Any surplus revenues would becredited to the airlines and any deficit charged tothem in calculating airline landing fees or otherrates for the following year.4

The Compensatory Approach

Under a compensatory approach, the airportoperator assumes the financial risk of airport oper-ation, and airlines pay rates and charges equal tothe costs of the facilities they use as determinedby cost accounting. In contrast to the situationat residual-cost airports, the airlines at a compen-satory airport provide no guarantee that fees and

3Debt service coverage is the requirement that the airport’s rev-enues, net of operating and maintenance expenses, be equal to aspecified percentage in excess of the annual debt service (principaland interest payments) for revenue bond issues. The coverage re-quired is generally from 1.25 to 1.40 times debt service, thereby pro-viding a substantial cushion that enhances the security of the bonds.This is discussed further in ch. 7.

4Haro1d B. Kluckholn, “Security for Tax-Exempt Airport RevenueBonds,” summary of remarks presented at the New York Law JournalSeminar on Tax-exempt Financing for Airports, 1980.

Ch. 6—Airport Financial Management and Pricing . 127

rents will suffice to allow the airport to meet itsannual operating and debt service requirements.A compensatory approach is currently in use at10 of the 24 large commercial airports and 15 ofthe 36 medium airports surveyed by CBO.

Although individual airports have adoptedmany versions of the compensatory approach, thesimplified example set out in table 19 illustratesthe basics. First, for each cost center a calcula-tion would be made of the total annual expenseof running the center, including administration,maintenance, operations, and debt service (withcoverage). The airlines’ shares of these costs wouldthen be based on the extent of their actual use offacilities within each cost center. The airlineswould not be charged for the costs of public space,such as terminal lobbies. Nor would they receiveany credit for nonairline revenues, which offsetexpenses in the residual-cost approach but are dis-regarded under a compensatory approach in cal-culating rates and charges to the airlines.

Comparison of Residual-Cost andCompensatory Approaches

These two major approaches to financial man-agement of major commercial airports have sig-

nificantly different implications for pricing andinvestment practices. In particular, they help de-termine:

●

●

●

an airport’s potentiaI for accumulating re-tained earnings usable for capital devel-opment;the nature and extent of the airlines’ role inmaking airport capital investment decisions,which may be formally defined in majority-in-interest clauses included in airport useagreements with the airlines; andthe length of term of the use agreement be-tween the airlines and the airport operator.

These differences, examined below, can havean important bearing on an airport’s performancein the municipal bond market, as will be discussedin chapter 7.

Retention of Earnings

Although large and medium commercial air-ports generally must rely on the issuance of debtto finance major capital development projects, theavailability of substantial revenues generated inexcess of costs can strengthen the performance ofan airport in the municipal bond market. It canalso provide an alternative to issuing debt for the

128 Airport System Development

financing of some portion of capital development.Residual-cost financing guarantees that an airportwill always break even—thereby assuring serv-ice without resort to supplemental local tax sup-port—but it precludes the airport from generat-ing earnings substantially in excess of costs.5

By contrast, an airport using a compensatoryapproach lacks the built-in security afforded bythe airlines’ guarantee that the airport will breakeven every year. The public operator undertakesthe risk that revenues generated by airport feesand charges may not be adequate to allow the air-port to meet its annual operating costs and debtservice obligations. On the other hand, becausetotal revenues are not constrained to the amountneeded to break even, and because surplus rev-enues are not used to reduce airline rates andcharges, compensatory airports may earn and re-tain a substantial surplus, which can later be usedfor capital development. Since the pricing of air-port concessions and consumer services need notbe limited to the recovery of actual costs, theextent of such retained earnings generally dependson the magnitude of the airport’s nonairlinerevenues. b

Because the residual-cost approach is not de-signed to yield substantial revenues in excess of

. . --‘Peat, Marwick, Mitchell & Co., “Comparative Rate Analysis:

Dade County Aviation and Seaport Departments, ” August 1982,p. 3.

‘Market pricing of concessions and other nonairline sources ofrevenue is a feature of both residualcost and compensatory airports.

costs, residual-cost airports, as a group, tend toretain considerably smaller percentages of theirgross revenues than do compensatory airports.A few residual-cost airports, however, have mod-ified the approach to permit accumulation of siz-able retained earnings for use in capital projects.At Miami and Reno International Airports, forexample, certain airport-generated revenues areexcluded from the revenue base used in calculat-ing the residual cost payable by the airlines; therevenues flow instead into a discretionary fundthat can finance capital development projects.

Majority=in-interest

In exchange for the guarantee of solvency, air-lines that are signatory to a residual-cost useagreement often exercise a significant measure ofcontrol over airport investment decisions andrelated pricing policy. These powers are embodiedin so-called majority-in-interest clauses, which area much more common feature of airport useagreements at residual-cost airports than at air-ports using a compensatory approach (see table20). At present, more than three-quarters of thelarge commercial airports using a residual cost ap-proach have some form of majority-in-interestclause in their use agreements with the airlines,and two-thirds of the medium residual-cost air-ports have such clauses. Of the airports surveyed,only one-tenth of the large and one-third of me-dium commercial airports that use a compen-satory approach to financial management havemajority-in-interest clauses in their use agreements.

Table 20.—Role of Airlines in Approving Capitai Projects atCommercial Airports, 1983°

Large MediumAirline role Number Percent Number PercentResidual costMajority-in-Interest clause . . . . . . . . . . . . 11 79 14 67No formal requirement of

airline approval . . . . . . . . . . . . . . . . . . . 3 21 7 33Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 100 21 100

CompensatoryMajority-in-Interest clause . . . . . . . . . . . . 1 10 5 33No formal requirement of

airline approval . . . . . . . . . . . . . . . . . . . 9 90 10 67Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 100 15 100

Grand total . . . . . . . . . . . . . . . . . . . . . 24 — 36 —

Ch. 6—Airport Financial Management and Pricing 129

Majority-in-interest clauses give the airlinesaccounting for a majority of traffic at an airportthe opportunity to review and approve or vetocapital projects that would entail significant in-creases in the rates and fees they pay for the useof airport facilities. 7 This arrangement providesprotection for the airlines that have assumed fi-nancial risk under a residual-cost agreement byguaranteeing payment of all airport costs not cov-ered by nonairline sources of revenue. For in-stance, without some form of majority-in-interestclause, the airlines at a residual-cost airport couldbe obligating themselves to pay the costs of as-yet-undefined facilities that might be proposed inthe 15th or 20th year of a 30-year use agreement.Under a compensatory approach, where the air-port operator assumes the major financial risk ofrunning the facility, the operator is generally freerto undertake capital development projects with-out consent of the airlines that account for a ma-jority of the traffic. Even so, airport operatorsrarely embark on major projects without con-sulting the airlines that serve the airport. Poten-tial investors in airport revenue bonds would bewary of a bond issue for a project lacking the air-lines’ approval.

Specific provisions of majority-in-interest clausesvary considerably. At some airports, the airlinesthat account for a majority of traffic can approveor disapprove all major capital developmentprojects—e.g., any project costing more than$100,000. At others, projects can only be deferredfor a certain period of time (generally 6 monthsto 2 years). Although most airports have at leasta small discretionary fund for capital improve-ments that is not subject to majority-in-interestapproval, the general effect of majority-in-interestprovisions is to limit the ability of the public air-port owner to proceed with any major project op-posed by the airlines. Sometimes, a group of justtwo or three major carriers can exercise suchcontrol.

The combination of airlines that can exercise majority-in-interestpowers varies. A typical formulation would give majority-in-interestpowers to any combination of “more than so percent of the scheduledairlines that landed more than 50 percent of the aggregate revenueaircraft weight during the preceding fiscal year” (standard documentwording).

Term of Use Agreement

At the airports examined in the CBO study,residual-cost airports typically have longer termuse agreements than do compensatory airports.This is because residual-cost agreements histori-cally have been drawn up to provide security forlong-term airport revenue bond issues; and theterm of the use agreement, with its airline guar-antee of debt service, has generally coincided withthe term of the revenue bonds. More than 90 per-cent of the large and 75 percent of the mediumresidual-cost airports surveyed by CBO have useagreements with terms of 20 or more years (seetable 21). Terms of 30 years or longer are not un-common.

By contrast, about 60 percent of the large and40 percent of the medium compensatory airportssurveyed have use agreements running for 20years or more. Four of the compensatory airportssurveyed have no contractual agreements what-ever with the airlines. At these airports, rates andcharges are established by local ordinance orresolution. This arrangement gives airport oper-ators maximum flexibility to adjust their pricingand investment practices unilaterally, without theconstraints imposed by a formal agreement ne-gotiated with the airlines, but it lacks the secu-rity provided by contractual agreements.

Pricing of Airport Facilitiesand Services

Major commercial airports are diversified enter-prises - that provide a wide range of facilities andservices for which fees, rents, or other user chargesare assessed. Most commercial airports, regardlessof size, type, or locale, offer four major types offacilities and services:

• airfield facilities, made up of runways, tax-iways, aprons, and parking ramps for use bycommercial and general aviation;

● terminal area facilities and services providedto concessionaires and consumers, includingauto parking and ground transportation,restaurants and snack bars, specialty stores(e.g., newsstands and duty-free shops), carrental companies, passenger convenience fa-cilities (e.g., porter service, restrooms, tele-phones, and vending machines), personal

.

130 . Airport System Development

Table 21.–Term of Airport Use Agreements at Commercial Airports, 1983

Large Medium

Length of term Number Percent Number Percent

Residual cost20 years or more. . . . . . . . . . . . . . . . . . . . 13 93 16 7611-19 years. . . . . . . . . . . . . . . . . . . . . . . . . 0 0 2 106-10 years . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 55 years or less. . . . . . . . . . . . . . . . . . . . . . 1 7 : oNegotiations in process . . . . . . . . . . . . . 0 0 2 10

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 100 21 100

compensatory20 years or more . . . . . . . . . . . . . . . . . . . . 6 60 6 4011-19 years.... . . . . . . . . . . . . . . . . . . . . . o 0 2 136-10 years . . . . . . . . . . . . . . . . . . . . . . . . . . 1 10 2 135 years or less..... . . . . . . . . . . . . . . . . . 0 0 3 20No use agreements . . . . . . . . . . . . . . . . . 3 30 1 7Negotiations in process . . . . . . . . . . . . . 0 0 1 7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 100 15 100

Grand total . . . . . . . . . . . . . . . . . . . . . 24a — 36b —

‘Ground rentals are leases of land in which the lessee pays thecost of constructing any facilities, such as terminals, upon it.

9Fixed base operators are private concerns that lease aircraft andoffer aviation services, such as fuel sale, flight instruction, and air-craft maintenance.

ports decrease in size, and many of the smallest

do not generate sufficient revenue to cover their

o p e r a t i n g c o s t s , m u c h l e s s c a p i t a l i n v e s t m e n t .

Among GA a i rpor t s , those tha t l ease l and or fa -

cil it ies for industrial use generally have a betterchance o f cover ing the i r cos t s o f opera t ion thando those providing only aviation-related services

and fac i l i t i es . l”

T h e c o m b i n a t i o n o f p u b l i c m a n a g e m e n t a n d

pr iva te enterpr i se un ique ly charac ter i s t i c o f the

f i n a n c i a l o p e r a t i o n o f c o m m e r c i a l a i r p o r t s i s

reflected in the divergent pricing of airport facil-ities and services. The private enterprise aspectsof airport operation—the services and facilitiesfurnished for nonaeronautical use—generally arepriced on a market pricing basis. On the otherhand, the pricing of facilities and services for air-lines and other aeronautical users is on a cost-recovery basis, either recovery of the actual costsof the facilities and services provided (the com-pensatory approach) or recovery of the residualcosts of airport operation not covered by nonair-Iine sources of revenue. This mix of market pric-

‘OSee Joel Crenshaw and Edmund Dickinson, “Investment Needsand Self-Financing Capabilities: U.S. Airports, Fiscal Years 1981-1990,” report prepared for the U.S. Department of Transportation,July 1978, pp. 12, 45; and Laurence E. Gesell, The Administrationof Public Airports, Coast Aire Publications, 1981, pp. VI 6-13.

Ch. 6—Airport Financial Management and Pricing 131

ing and cost-recovery pricing has important imp-lications for airport financing, especially withregard to the structure and control of airportcharges and the distribution of operating revenues,

Structure and Control ofAirport Charges

At major commercial airports, the structure andcontrol of fees, rents, and other charges for facil-ities and services are governed largely by a vari-ety of long- and short-term contracts, includingairport use agreements with the airlines, leases,and concession and management contracts. Foreach of the four major groups of facilities andservices outlined above, the basic kinds of chargesassessed at residual-cost and compensatory air-ports can be compared in terms of:

● method of calculation,● term of agreement, and● frequency of adjustment.

Airfield Area

The major fees assessed for use of airfield fa-cilities are landing or flight fees for commercialairlines and GA aircraft. Some airports also levyother airfield fees such as charges for the use ofaircraft parking ramps or aprons. In lieu of land-ing fees, many smaller airports, especially GA air-ports, collect fuel “flowage” fees, which are leviedper gallon of aviation gasoline and jet fuel soldat the airport.

At residual-cost airports, the landing fee for air-lines is typically the item that balances the budget,making up the projected difference between allother anticipated revenues and the total annualcosts of administration, operations and mainte-nance, and debt service (including coverage).Landing fees differ widely among residual-cost air-ports, depending on the extent of the revenuesderived from airline terminal rentals and conces-sions such as restaurants, car rental companies,and automobile parking lots. If the nonairlinerevenues are high in a given year, the landing feefor the airlines may be quite low. In recent years,several airports—including Los Angeles and Hon-olulu International—have approached a “nega-tive” landing fee. At some residual-cost airports,

the landing fee is the budget-balancing item forthe airfield cost center only. At such airports, thesurplus or deficit in the terminal cost center hasno influence on airline landing fees, and terminalrental rates for the airlines may be set on a resid-ual-cost or a compensatory basis.

The method of calculating landing fees at re-sidual-cost airports is established in the airportuse agreement and continues for the full term ofthe agreement. To reflect changes in operatingcosts or revenues, landing fees are typically ad-justed at specified intervals ranging from 6 monthsto 3 years. At some airports, fees maybe adjustedmore often if revenues are significantly lower orhigher than anticipated. Often, the nonsignatoryairlines (those not party to the basic use agree-ment) pay higher landing fees than the signatorycarriers. General aviation landing fees vary greatlyfrom airport to airport, ranging from chargesequal to those paid by the commercial airlines tonone at all. Most landing fees are assessed on thebasis of certificated gross landing weight. ”

At compensatory airports, airline landing feesare based on calculation of the average actualcosts of airfield facilities used by the airlines (seetable 22). As in the case of residual-cost airports,each airline’s share of these costs is based onits share of total projected airline gross landingweights (or, in a few cases, gross takeoff weight).In addition to fees determined by this weight-based measure, three compensatory airports—Boston Logan International and John F. Kennedyand La Guardia airports in New York—assess asurcharge on GA aircraft during hours of peakdemand. At present, however, no major airports

“This practice of basing landing fees on aircraft weight tends topromote use of commercial airports by general aviation. Since mostGA aircraft are relatively light (under 10,000 lb), they pay very lowlanding fees at most commercial airports-typically $10 or less. Thesmallest GA aircraft (under 2,500 lb) often pay no fee. Among theairports surveyed by CBO there is no clear indication that landingfees for GA differ systematically as a function of pricing policy.Residual-cost and compensatory airports alike have landing fees forGA that are so small as to be a negligible, either as a source ofrevenue to the airport or as a deterrent to use of congested facilities.

132 Airporf System Development

Table 22.–Profiie of Landing Fees at Four Major Airports, 1982

Airline Iandina fee

Basis of fee Method of calculation Feea General aviation landing fee

Fee = public aircraft facilities costsdivided by total projected scheduledairline landing weights; adjustedannually

Fee = airfield cost center expensesdivided by total projected airlinelanding weights; adjusted annually

Fee = residual cost divided byestimated total landing weights ofall airlines; adjusted semiannually

Fee = residual cost divided byestimated total landing weights ofall airlines; adjusted every 3 years

$1.24

$0.34

$0.75’

$0.23

Depafiments, August 1982.

impose such peak-hour surcharges on commer-cial airlines to help ease congestion problems.12

Landing fees at compensatory airports are es-tablished either in airport use agreements with theairlines or by local ordinance or resolution. Thefrequency of adjustment of the fees is compara-ble to that at residual-cost airports.

Terminal Area

The structure of terminal concession and serv-ice contract fees is similar under both pricing ap-proaches. Concession contracts typically providethe airport operator with a guaranteed annualminimum payment or a specified percentage of

the concessionaire’s gross revenues, whichever isgreater. Restaurants, snack bars, gift shops, news-stands, duty-free shops, hotels, and rental caroperations usually have contracts of this type.Terminal concession contracts are often bid com-petitively, and they range in term from month-to-month agreements to contracts of 10 to 15years’ duration. (Hotel agreements generally havemuch longer terms, often running for 40 years ormore. ) Airport parking facilities may be operatedas concessions; they may be run by the airportdirectly; or they may be managed by a contrac-tor for either a flat fee or a percentage of revenues.

Airline Leased Areas

At both residual-cost and compensatory air-ports, airlines pay rent to the airport operator forthe right to occupy various facilities (terminalspace, hangars, cargo terminals, and land). Rentalrates are established in the airport use agreements,in separate leases, or by local ordinance or resolu-tion. Terminal space may be assigned on an ex-clusive-use basis (to a single airline), a preferential-

Ch. 6—Airport Financial Management and Pricing ● 133

use basis (if a certain level of activity is not main-tained, the airline must share the space), or ona joint-use basis (space used in common by sev-eral airlines). Most major commercial airports usea combination of these methods. In addition, air-ports may charge the airlines a fee for use of anyairport-controlled gate space and for the provi-sion of Federal inspection facilities required at air-ports serving international traffic. Some airportshave long-term ground leases with individual air-lines that allow the airlines to finance and con-struct their own passenger terminal facilities onland leased from the airport.

Among residual-cost airports, the method ofcalculating airline terminal rental rates varies con-siderably. If airline fees and charges are calculatedon a residual-cost basis within each cost center,the method of calculating rental rates resemblesthat of the simplified example shown in table 19.To arrive at the airline fee, total nonairline rev-enues generated within the terminal cost centerare subtracted from the total costs of the center(administration, operations and maintenance, anddebt service). Each airline’s share is based on thesquare footage it occupies, with proration ofjointly used space.

On the other hand, at residual-cost airportswhere receipts from airline landing fees alone areused to balance the airport budget, the terminalrental rates for the airlines may be set in variousways—on a compensatory basis (recovering theaverage actual costs of the facilities used), by anoutside appraisal of the property value, or by ne-gotiation with the airlines. In all cases, each air-line’s share of costs is based on its proportionateuse of the facilities. Rental rates may be uniformfor all types of space leased to the airlines, or theymay differ according to the type of space pro-vided—for example, they may be significantlyhigher for leases of ticket counters or office spacethan for rental of gate or baggage claim areas.

At residual-cost airports, the rental term for air-line leased areas generally coincides with the termof the airport use agreement with the airlines. Thefrequency of adjustment of terminal rental ratesranges considerably—annually at many airports,but up to 3 to 5 years at others.

At compensatory airports, the method of cal-culating terminal rental rates for the airlines isbased on recovery of the average actual costs ofthe space occupied. Each airline’s share of the totalcosts is based on the square footage leased. Typi-cally, rates differ according to the type of spaceand whether it is leased on an exclusive, preferen-tial, or joint-use basis. The rental term for air-line leased areas often coincides with that of theairport use agreement. (It is set by ordinance atairports that operate without agreements. ) Ratesare typically adjusted annually at compensatoryairports.

Other Leased Areas

A wide variety of arrangements are employedfor other leased areas at an airport, which mayinclude agricultural land, fixed base operations,cargo terminals, and industrial parks. The meth-ods of calculating rental rates and the frequencyof adjustment differ according to the type of fa-cility and the nature of use. What these disparaterentals have in common is that, like terminal con-cessions and services, they are generally pricedon a market basis; and the airport managers haveconsiderable flexibility in setting rates and chargesin the context of market constraints and their ownpolicy objectives.

Variation in the Source ofOperating Revenues

1n general, revenue diversification enhances thefinancial stability of an airport. In addition, thespecific mix of revenues may influence year-to-year financial performance. Some of the majorsources of airport revenue (notably landing feesand terminal concessions) are affected by changesin the volume of air passenger traffic, while others(e.g., airline terminal rentals and ground leases)are essentially immune to fluctuations in airtraffic.

The distribution of operating revenues differswidely according to factors such as passengerenplanements, the nature of the market served,and the specific objectives and features of the air-port’s approach to pricing and financial manage-ment. Airport size generally has a strong influ-ence on the distribution of revenues. The larger

134 ● Airport System Development

commercial airports typically have a more diver-sified revenue base than smaller airports. For ex-ample, they tend to have a wider array of income-producing facilities and services in the passengerterminal complex. In general, terminal concessionscan be expected to generate a greater percentageof total operating revenues as passenger enplane-ments increase. On average, concessions accountfor at least one-third of total operating revenuesat large, medium, and small commercial airports,compared to about one-fifth at very small (nonhub)commercial airports and a smaller fraction stillat GA airports (see table 23).

Factors other than airport size also affect dis-tribution of operating revenues. At commercialairports, for example, parking facilities generallyprovide the largest single source of nonairlinerevenues in the terminal area. Airports that havea high proportion of connecting traffic may, how-ever, derive a smaller percentage of their operat-ing income from parking revenues than do so-called “origin and destination” airports. Other fac-tors that may affect parking revenues includeavailability of space for parking, the volume ofair passenger traffic, the airport pricing policy,availability and cost of alternatives to driving tothe airport (e.g., mass transit and taxicab serv-

ice), and the presence of private competitors pro-viding parking facilities at nearby locations offthe airport property.

The approach to financial management, be-cause it governs the pricing of facilities and serv-ices provided to airlines, significantly affects thedistribution of operating revenues. Since so manyother factors play an important role in determin-ing revenue distribution, however, the mix ofoperating revenues at an airport cannot be pre-dicted on the basis of whether the airport employsa residual-cost or a compensatory approach. Themix of revenues varies widely among residual-costairports. With airline landing fees characteris-tically picking up the difference between airportcosts and other revenues at residual-cost airports,airfield area income differs markedly accordingto the extent of the airport’s financial obligations,the magnitude of terminal concession income andother nonairline revenues, and the volume of airtraffic. In 1982, for example, airfield area revenuesprovided anywhere from 10 percent (Tampa In-ternational) to more than 50 percent (ChicagoO’Hare International) of total operating revenuesat residual-cost airports. By contrast, compen-satory airports show a considerably smaller rangeof variation in the distribution of revenues.

Table 23.–Average Operating Revenue by Revenue Source, Commercial and Generai Aviation Airports, 1975-76

Ch. 6—Airport Financial Management and Pricing 135

TRENDS IN AIRPORT MANAGEMENT SINCE DEREGULATION

FederaI deregulation of the airline industry hasradically changed the market in which airlines—and airports—operate. Once subject to strict reg-ulation of routes and fares, commercial air car-riers are now free to revise routes, adjust fares,and introduce or terminate service to particularairports as market conditions seem to warrant.This new freedom from Federal intervention hashad pronounced effects on the airline industry.It has spurred intense competition and even pricewars among the airlines, led to reconfigurationof the route system, and encouraged the startupof new carriers. For some of the established air-lines, serious financial difficulties have ensued. Al-though deregulation has not caused radical changesin the financial management of airports, recenttrends do reflect the uncertainties of a new, openmarket. Deregulation also appears to have ac-celerated certain shifts in management policy andpractice that were under way before deregulation.

Since the early days of commercial air travel,would-be investors in airport revenue bonds haveheld long-term use agreements in high regard, con-sidering them evidence of the airlines’ commitmentto serve an airport for long periods—spans usu-ally coincident with the terms of bond issues. Asthe industry has matured, however, investors andanalysts have increasingly recognized that an air-port’s financial stability—hence its capacity togenerate a stream of revenue adequate to securerevenue bond issues—depends more on the under-lying strength of the local air travel market thanon long-term use agreements.

Deregulation has reinforced this shift, as thestrength of the airlines’ financial commitment toan airport is significantly diluted by their new flex-ibility to withdraw from a market virtually at will.Confidence has also been shaken by the financialproblems now plaguing many airlines. Althoughchanges in airport financial management occurvery slowly (many standing use agreements runthrough the 1990s or later), three important trendsin financial management are now emerging at ma-jor commercial airports:

● shorter term contracts—shorter terms for air-port use agreements, nonairline leases, and

●

●

concessionaires’ contracts, and more frequentadjustment of rates and charges;modification of residual-cost approach—modification of residual-cost ratemaking andmajority-in-interest provisions, with move-ment in the direction of more compensatoryforms of financial management; andmaximization of revenues—concerted effortby airport managers to maximize revenuesby means of a variety of strategies intendedto strengthen and diversify the revenue baseof the airport.

Shorter Term Contracts

Deregulation appears to have hastened a trendtoward shorter term airport use agreements thatwas already under way prior to 1978. Shorterterm contracts give airport operators greater flex-ibility to adjust pricing, investment policies, andspace allocation to meet shifting needs in a de-regulated environment. For example, several air-ports with long-term use agreements in force havegiven much shorter term agreements to air car-riers that have begun serving the airport since1978. Contracts for such recent entrants often runfor 5 years or less, and they may take the formof yearly or even month-to-month operatingagreements (similar to those used for air taxi andcommuter operators). At least 15 percent of thelarge and medium airports surveyed by CBO havegranted new carriers such relatively short-termterminal leases and/or use agreements. Moreover,as existing long-term use agreements expire, manyairport operators indicate an intention to negoti-ate shorter term use agreements with all carriersserving the airport. At least a dozen of the air-ports surveyed by CBO either have recently con-cluded shorter term agreements or anticipate thatnew use agreements (planned or in negotiation)will be significantly shorter than ones now stand-ing. In part, this reflects the fact that many post-deregulation agreements have not involved ma-jor capital development programs requiring long-term bond financing.

Many airports also report that, as old contractsexpire, they are routinely shortening the terms ofnonairline leases and contracts with concession-

2 5 - 4 2 0 0 - 8 4

— —

136 ● Airport System Development

aires. Some are also moving to more frequent ad-justment of rates and charges under existing agree-ments to meet the escalating costs of airportoperation.

Modifications of Residual=

better able to assume the financial risks of airportoperation without relying on “break-even” guar-antees by the airlines, and they may maximizerevenues by adopting a compensatory approach.

Maximization of Revenues

No matter how they approach financial man-agement, many commercial airports are now seek-ing to increase and diversify their revenues by avariety of strategies. These include raising existingfees and rental rates, seeking more frequent ad-justment of charges, using competitive bidding forconcessionaires’ contracts, increasing the airport’spercentage of gross profits, and exploiting newor untapped sources of revenue—e.g., videogamerooms, industrial park development, and leasingof unused airport property. Some airports arelooking to future possibilities, as well. For exam-ple, two large airports that recently renegotiatedairport use agreements—Chicago O’Hare andGreater Pittsburgh International-included clausesin the new contracts protecting the airport’s rightto levy a passenger facility charge (or head tax)if and when Federal law permits. In general, thiseffort to diversify and expand revenue sourcesreflects the paramount importance of a guaranteedstream of income to assure an airport’s financialsuccess.

Chapter 7

AIRPORT FUNDING

Photo credit cederal Awarlon Administration I

Contents

PageFederal Airport Development Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Investment Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139Demand for Airport Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

Financial Condition of U.S. Airports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143Measures of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143Recent Trends in the Financial Strength of Airports . . . . . . . . . . . . . . . . . . . . . . 143Effects of Airport Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144Effects of Airline Deregulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Airports in the Municipal Bond Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147Role of the Municipal Bond Market in Airport Development . . . . . . . . . . . . . . 147The Market for Airport Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

List of Tables

Table No, Page24. Projected Federal Capital Expenditures on Airports Undercurrent Policy,

1984-89 (in millions of 1982 dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13925. Projected Annual Demand for Airport Capital, by Airport Type,

1984-93 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14126. Financial Performance of Commercial Airports, 1975-82 . . . . . . . . . . . . . . . . . 14427. Financial Performance of Commercial Airports, Compared by

Management Approach, 1975-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14528. Financial Performance of Commercial Airports, by Airport Size, 1975-82. . 14629. Airport Bond Issues, 1978-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14730. Airport Bond Issues, By Type of Issue and Security, 1978-82 . . . . . . . . . . . . 14831. Use of Bond Market to Raise Capital, By Airport Size and Type,

1978-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14832. Contribution of Federal Grants and Bond Issues to Airport Investment,

1978-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14933. Airport Bond Issues, By Type of Security, 1978-82 . . . . . . . . . . . . . . . . . . . . . 15034. Average Size of Airport Bond Issues, 1978-82 . . . . . . . . . . . . . . . . . . . . . . . . . . 15135. Airport Bond Ratings, 1978-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15236. Comparison of Interest Rates for Airport Bonds and

Other Municipal Bonds, 1978-82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15537. Influence of Financial Management Approach on

Airport Bond Interest Rates, 1978-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

List of Figures

Figure No. Page17. Federal, State, and Local Shares of Public Spending on Airports,

1960-80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14018. Federal Capital Spending on Airports, By Type of Airport, 1960-87 . . . . . . 142

Chapter 7

AIRPORT FUNDING’

This chapter examines the financial conditionof U.S. airports and their ability to compete forprivate capital. It begins with a brief outline ofthe evolution of Federal airport funding programsand summarizes the demand for airport invest-ment under current policy. This is followed byanalysis of the financial performance of airports

in recent years compared to other municipal enter-prises, with special attention to the effects of air-line deregulation. Since tax-exempt municipalbonds are a primary source of capital for com-mercial airports, extended treatment is given tothe ability of airports of different kinds and sizesto compete in the bond market.

FEDERAL AIRPORT DEVELOPMENT AID

Federal capital spending on airports is financedby user fees, levied chiefly as excise taxes on do-mestic airline tickets and general aviation (GA)fuel. These taxes, which originated in 1933 and1941, were not formally linked to airport expend-itures until 1970, when the Airport and AirwayRevenue Act established the Airport and AirwayTrust Fund. Most of the Trust Fund income (over80 percent) derives from an 8 percent tax on do-mestic passenger tickets. A tax of 14 cents pergallon on GA jet fuel (12 cents for gasoline) con-tributes about 5 percent of Trust Fund revenues.Funds are disbursed to major airports in the formof matching grants determined by a formula basedon passenger volume and through discretionarygrants to meet special needs. Federal grants can

be used for a wide range of airport developmentprojects, including new construction and upgrad-ing of runways, taxiways, and aprons, construc-tion or improvement of public-use terminal areas,and projects related to safety and noise reduction.Over the next few years, Federal aid to airportsis projected to increase from the average of $600million per year for the period 1970-82 to $800million by 1986 (all in 1982 dollars, see table 24).

Investment Trends

Between 1960 and 1982, cumulative public andprivate investment in the Nation’s airports totaled$25.1 billion (in 1982 dollars), of which the Fed-eral share accounted for $9 billion, or just aboveone-third. 2 These overall figures, however, maskwide year-to-year fluctuations in the Federal share

.— -2This excludes the value of tax expenditures stemming from tax-

exempt bonds issued by municipal and airport authorities.

Table 24.–Projected Federal Capital Expenditures on Airports Under Current Policy, 1984-89(in millions of 1982 dollars)

1984 ● 1985 1966 1967 1988 1989Commercial:

Large . . . . . . . . . . . . . . . . . . . 194 188 200 207 196 200Medium . . . . . . . . . . . . . . . . . 101 98 104 108 102 104Small . . . . . . . . . . . . . . . . . . . 248 240 256 265 251 256

Subtotal . . . . . . . . . . . . . . 543 526 560 580 549 560General aviation:

Reliever. . . . . . . . . . . . . . . . . 81 79 64 87 82 84Other . . . . . . . . . . . . . . . . . . . 143 139 148 153 145 148

Subtotal . . . . . . . . . . . . . . 224 218 232 240 227 232

Total . . . . . . . . . . . . . . . 775 751 601 827 785 800NOTES: Projections assume that currently authorized funding is continued through 1989 and that obligations equal new authorizations in each year. Allocation among

airports is based on data supplied by FAA.Totals may not add because of rounding and because they include 1 percent of funding used for planning.

SOURCE: Congressional Budget Office.

139

140 ● Airport System Development

of total airport investment. Between 1973 and mix and total volume of airport investment. Peak1977, the Federal share swung from a post-1970 investment in 1973, for example, was the resultlow of 20 percent to a high of 85 percent (see fig. of very large capital outlays by some of the largest17). Such swings have resulted not from shifts in commercial airports, which rely more on debtFederal outlays, which have remained relatively financing than on Federal aid for investment cap-stable since 1970, but from extreme changes in the ital. On the other hand, many small airports, par-

Figure 17.–Federal, State, and Local Shares of Public Spending on Airports, 1960.80

2.2

2.0

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0

I

Total

1960 1965 1970 1975 1980

Fiscal yearsSOURCES: Congressional Budget Office based on data provided by Federal Aviation Adminlstratlon (Federal outlays) and U.S. Department of

Commerce, Bureau of the Census (State and local outlays).

Ch. 7—Airport Funding ● 141

ticularly general aviation airports, earn revenuesinsufficient to cover debt service; these airportstend to rely much more heavily on Federal money.In 1977, a year of low overall airport outlays inwhich much spending probably reflected GA air-port improvements, the Federal share exceeded80 percent. The States’ share of airport investmenthas remained fairly stable since 1970, at about 11percent.3

The Airport Improvement Program currentlytargets Federal funds both to commercial airportsand to 2,643 general aviation facilities. Of the lat-ter, 219 “reliever” airports are eligible for speciallytargeted funds that will amount to $80 million peryear by 1986—a dramatic increase over the aver-age of about $25 million per year for such airportsin the period 1976-82 (see fig. 18). Federal invest-ment in other general aviation airports also grewsteadily throughout the 1970s, and under currentpolicies, outlays in constant dollars would tripleby 1987, compared to the 1980-82 level.

Demand for Airport Investment

As a result of national economic developmentand a general pattern of public sector subsidiza-tion of aviation activity, growth in both commer-cial airlines and general aviation has led to mount-ing airport investment needs. Since 1970, the

3From data supplied by the National Association of State Avia-tion Officials.

number of GA aircraft in use grew by 63 percent(to 213,000 in 1982), and the number of hoursflown increased by 67 percent. At the same time,with the introduction of wide-body jets, the num-ber of commercial aircraft in service actuallydeclined by 7.7 percent, from 2,690 to 2,483. Asa result, general aviation now exerts particularpressure on the runways, taxiways, and other air-field components of a number of major commer-cial airports, often accounting for more than halfof all takeoffs and landings. More frequent com-mercial flights at the major airports put pressureon terminals and other buildings, parking lots,and access roads.

The resulting congestion has led the FederalAviation Administration (FAA) to project a needfor substantial investment in upgrading, mainte-nance, and expansion. Annual airport investmentdemand, including work not eligible for Federalgrants, will be $1.5 billion to $2 billion between1984 and 1993, of which the Federal share—undercurrently defined programs—would be about $0.8billion. This sum represents an estimated 3.3 per-cent of the Federal share of all public works in-frastructure needs.’ Of the $1.5 billion to $2 bil-lion, roughly one-third would be needed to correctall present and expected deficiencies at commer-cial airports; two-thirds would pay for new ca-pacity (see table 25).

4Public Works Infrastructure: Policy Considerations for the 1980s,(Washington, DC: Congressional Budget Office, April 1983).

Table 25.–Projected Annual Demand for Airport Capital, by Airport Type, 1984=93

Percent of demand

Estimated total demand Expanded(millions of 1982 dollars) capacity Upgrading Maintenance

Commercial:Large. . . . . . . . . . . . . . . . . . . . . . 450-650 20 4 5Medium . . . . . . . . . . . . . . . . . . . 200-350 10 2 1Small. . . . . . . . . . . . . . . . . . . . . . 400-500 15 5 5

Subtotal . . . . . . . . . . . . . . . . . 1,050-1,450 45 11 11General aviation:

Reliever . . . . . . . . . . . . . . . . . . . 100-150 5 2 1Other. . . . . . . . . . . . . . . . . . . . . . 400-450 15 6 4

Subtotal . . . . . . . . . . . . . . . . . 500-600 20 8 5

Total . . . . . . . . . . . . . . . . . . 1,550-2,050 65 19 16

142 . Airport System Development

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

Figure 18.–Federal Capital Spending on Airports, By Type of Airport, 1960.87

All airports A

L

II

I

II

II

I

I

Newbudgetauthority

1960 1965 1970 1975 1980 1985

Fiscal years

NOTE: Outlays for 19S3-87 are based on authorizations in the Airport and Airway Improvement Act of 1982. Typically, appropriations and thus actualoutlays are somewhat below authorized Ieveis.

SOURCE: Congressional Budget Office based on data provided by the Federal Aviation Administration.

Ch. 7—Airport Funding ● 143

FINANCIAL CONDITION OF U.S. AIRPORTSAs in any enterprise, the ability of an airport

to survive without public support hinges on itsfinancial strength. This section examines recenttrends in the financial performance of major com-mercial airports —those with earning power suf-ficient to issue revenue-backed bonds. It also com-pares the performance of these airports with thatof the other municipal enterprises competing withairports in capital markets-electric utilities, watersupply and wastewater treatment projects, andturnpike, bridge, tunnel, and expressway author-ities. s This section also assesses how the shiftsresulting from Federal deregulation of the airlinesmight affect the financial condition of airports ofvarious sizes.

Measures of Performance

Analysis of key financial ratios is a widely ac-cepted method of evaluating the financial condi-tion and performance of a single enterprise or anentire industry. b Many different financial ratioscan be constructed, each revealing a particularaspect of business performance.

Four indicators often used by investment ad-visors to judge the value of a municipal enterpriseto potential bondholders are: operating ratio, nettake-down ratio, debt-to-asset ratio, and debtservice safety margin. The first two indicate theavailability of revenues beyond those needed tomeet regular operating expenses:

● Operating Ratio —Derived by dividing oper-ating and maintenance expenses by operat-ing revenue, this ratio measures the share ofrevenues absorbed by operating and main-tenance costs. A relatively low operatingratio indicates financial strength, since itsignifies that only a small share of revenueis required to satisfy operating requirements.A high ratio (close to 1) indicates that rela-

5The data used here, including information from airports’ balancesheets and income statements, were provided by Moody’s InvestorsService Inc. and by the Public Securities Association. The Congres-sional Budget Office is alone responsible for the analysis and inter-pretation of these data.

6J. F. Weston, and E. F. Brigham, Manageti/ Finance (New York:Dryden, 5th ed. 1975), pp. 19-53.

tive]y little additional revenue is available forcapital spending.

● Net Take-Down Ratio —Calculated as grossrevenue minus operating and maintenanceexpenses, divided by gross revenues, the nettake-down is similar to the operating ratio,but it also includes nonoperating revenues(e.g., interest income). It is a slightly broadermeasure of the share of airport revenues re-maining after payment of operating expenses.

The second two indicators measure the abilityof an airport to support existing and new borrow-ing for capital investment:

● Debt-to-Asset Ratio—Calculated as grossdebt minus bond principal reserves, dividedby net fixed assets plus working capital, anenterprise’s debt-to-asset ratio measures thefraction of total assets provided by creditors.Creditors prefer low debt ratios because eachdollar of debt is secured by more dollars ofassets. This can be important if assets haveto be sold to pay off bondholders.

● Debt Service Safety Margin —Defined asgross revenues less operating and mainte-nance expenses and annual debt service di-vided by gross revenues, this ratio measuresboth the percentage of revenues available toservice new debt and the financial cushionto protect against unexpectedly low revenues.

Recent Trends in theFinancial Strength of Airports

Overall, examination of these measures showsa trend toward improved strength in the financesof major commercial airports. Compared to the1975-’78 period, when the operating ratio for theseairports averaged 55 percent, this measure im-proved significantly over the subsequent 4 years,declining to 50 percent (see table 26).7 The net

7Although most credit analysts (including Moody’s) use mediansrather than averages in analyzing industry groups, CBO has foundthat averages give an equally meaningful measure of relative per-

formance. This conclusion is based on an analysis of the statisticaldistribution of each financial ratio across individual airports. Instatistical terminology, these distributions are “normal” for the in-

(continued)

144 ● Airporl System Development

take-down ratio has also improved, increasingfrom 48 to 54 percent. This indicates a steady in-crease in the ability of commercial airports to serv-ice new debt from available net revenues. Indeed,major commercial airports today appear to per-form on a par with other financially self-sufficientmunicipal enterprises, such as electric utilities, wa-ter supply systems, and sewage treatment author-ities (see Box B).

Purchasers of airport revenue bonds look forassurances that an airport can generate net reve-nue (i.e., gross revenues net of operating andmaintenance costs and debt service requirements)sufficient to pay interest over the term of thebonds and to repay the principal. Though, incomparison to other financially mature munici-pal enterprises, airports appear to carry high levelsof debt relative to the value of their assets, netairport revenues appear relatively strong. Indeed,as shown in table 26, the debt service safety mar-gin for major commercial airports has grownsubstantially since 1978, despite the increase indebt-to-asset ratios. Thus, while only 20 percentof airport revenues were available to cover thecost of new investment over the 1975-78 period,the safety margin grew to 32 percent over the

years 1979-82. Moreover, in 1982, airports hada substantially higher debt service safety marginthan other major municipal enterprises except per-haps highway toll facilities, for which no infor-mation is available.

Effects of Airport Characteristics

Although major commercial airports as a groupappear financially strong, important differencesare apparent among them. These variations stemprimarily from the approach to financial manage-ment and the size and economic strength of theairport service area.

Financial Management

Differences in earning power may hinge onwhether an airport uses a compensatory or aresidual-cost approach to financial management.While gross revenue at a compensatory airportdepends largely on the volume of passenger traf-fic, gross revenue at a residual-cost airport maybe constrained to the minimum amount neededfor operations, debt service, and reserve fundsestablished in the airport’s bond resolutions. Infact, the three ratios that reflect gross revenues—operating ratio, net take-down ratio, and debtservice safety margin—all show substantial dif-ferences between airports using a residual-cost ap-proach and those using a compensatory approach.

Operating and net take-down ratios are sub-stantially stronger at airports using the compen-

Ch. 7—Airport Funding ● 145

satory approach (see table 27). Over the 1979-82period, for example, operating and maintenancecosts at compensatory airports absorbed only 44percent of operating revenues, while residual-costairports needed more than half their gross reve-nue just to cover such expenses. Net take-downratios reflect the same pattern; residual-cost air-ports retained roughly half of their gross revenues

after paying operating and maintenance costs,while compensatory airports retained 61 percent.Compensatory airports also exhibited substan-tially higher debt service safety margins—48 per-cent, as opposed to 25 percent for residual-costairports. This indicates that compensatory air-ports have greater ability to finance developmentwith retained earnings or through bond sales.

Table 27.–Financial Performance of Commercial Airports, Compared by Management Approach, 1975-82

Averages of all Airports in category (in percent)

Residual cost Compensatory All airportsb

Performance measurea 1975-78 1979-82 1975-78 1979-82 1975-78 1979-82

Operating ratio . . . . . . . . . . . . . 56.2 52.9 52.5 44.3 54,5 50.2Net take-down ratio . . . . . . . . . 46.5 51.5 53.2 60.8 48.5 54.2Debt-to-asset ratio . . . . . . . . . . 40.4 55.3 47.3 40.5 39.0 48.1Debt service safety margin . . . 16.0 24.6 33.1 48.3 19.9 31.6

SOURCE: Congressional Budget Office, based on financial performance data provided by Moody’s Investors Service, Inc., for 13 large, 10 medium, and 2 small commer-cial airports.

—

146 ● Airport System Development

Airport Size

Airport size (measured in passenger enplane-ments) has historically been an important deter-minant of financial performance. Larger airportsshow relatively stronger performance than smallerones. Operating ratios at large airports were 15percentage points better than those at medium air-ports during the 1975-78 period and 18 percent-age points better over the 1979-82 period (see table28). Net take-down ratios and debt service safetymargins reflect the same spread, while only debt-to-asset ratios are better at medium airports.

Effects of Airline Deregulation

Since deregulation of the airlines in 1978, thefinancial performance of large and medium air-ports has improved. Indeed, except for the debt-to-asset ratio at medium airports, large and me-dium airports show improvement on all fourratios. One plausible explanation is that many ma-jor airlines curtailed service to smaller cities, elec-ting instead to concentrate operations on the moreprofitable routes serving large and medium air-

Table 28.—Financial Performance of CommercialAirports, by Airport Size, 1975-82

ports. On balance, each 10-percent increase intraffic volume translates into a 2-percent improve-ment in operating and net take-down ratios anddebt service safety margin (see app. C). Increasedtraffic volume at many large and medium airportssince deregulation appears therefore to have im-proved gross revenues, yielding improvements inthose indicators that turn on changes in grossrevenue.

Prospective investors in airport revenue bondslook beyond financial indicators based on grossrevenues, however. In particular, they seek lowdebt-to-asset ratios as good cushions against pos-sible defaults. Though gross revenues grow withincreased business, so do capital needs as airportsmay need to expand terminals and other facilitiesto handle additional passengers and aircraft. Someairports, of course, have sufficient capacity to ab-sorb significant increases in traffic with no expan-sion. At medium airports, however, debt-to-assetratios have indeed increased by more than 14 per-centage points between the 1975-78 and 1979-82periods. As a result, the difference between thedebt-to-asset ratios at large and medium airportshas declined from 27 percentage points during the1975-78 period to 10 percentage points between1979-82. At the same time, the debt-to-asset ratioat large airports actually improved somewhat,from 57 percent (1975-78) to 54 percent (1979-82).Although the debt-to-asset ratio of medium air-ports is still better than at large airports, investorstend to be wary of worsening conditions becauseof the speculative factor that they introduce intoa prospective investment. Whether these trendshave actually diminished the investment value ofmedium airports is dealt with more closely laterin this chapter.

The picture of small airport performance is ex-tremely uncertain. The CBO analysis includesonly two small airports, and performance in-dicators are available only for the 1977-80 span,rather than for the full 1975-82 period at otherairports. The two small airports examined areclose in size to some medium airports, indicatingthat they probably represent the financially strongerairports in their class. Indeed, their financial ratiosare better than those of the average medium air-port—perhaps an indication that smaller airports

Ch. 7—Airport Funding ● 147

require better finances to offset the greater risksassociated with their size.

Financial ratios are unavailable for the remain-ing 489 small commercial airports and for pub-licly owned GA airports. In general, it appearsthat the income of these airports is inadequate tosupport the issuance of revenue-backed bonds. In-stead, to help finance capital development, manyof these airports depend on government-issuedgeneral obligation bonds, local taxpayer support,

and Federal grants. Revenues at some of thesmaller airports are so low that they fail to covereven operating costs. However, some of theseairports —especially GA airports with low userfees and aircraft parking charges—could strengthentheir financial performance by introducing newor increased charges for the use of airport fa-cilities.8

AIRPORTS IN THE MUNICIPAL BOND MARKETPerhaps the stiffest test of an airport’s finan-

cial strength is its success in competing with othermunicipal enterprises for private investment cap-ital in the bond market. The analysis presentedbelow points to two conclusions. First, while thefinancially stronger airports are the ones most ac-tive in the bond market, even financially weakerairports can attract private capital—though oftenthey must use the taxing power of the local gov-ernment as security for bond financing. Second,by comparing the cost of capital (the interest thatmust be paid to attract bond buyers) for airportswith that of other public enterprises, it is clearthat airports are generally viewed as good in-vestments.

Role of the Municipal Bond Market inAirport Development

Between 1978 and 1982, airports raised a totalof $5 billion (in 1982 dollars) in new bond financ-

ing to pay for capital improvements (see table29).9 Most municipal bonds are exempt from Fed-eral income tax, a key feature that makes thisfinancing less expensive than most other sourcesof private money. Predictably, therefore, the vastmajority of airport debt capital is raised in thetax-exempt bond market. In 1982 alone, airportsraised $1.4 billion in tax-exempt bond sales, orabout 2 percent of the total volume of $79 bil-lion in long-term tax-exempt securities sold in thatyear.

The 235 bond issues sold partly or wholly forairport development between 1975 and 1982 weredivided more or less equally between county andmunicipal governments (45 percent) and port orairport authorities (43 percent). Only a small pro-portion (about 6 percent) of all bonds sold wereissued by State governments, and about 6 percent

9 These are new bond issues only; refinancing issues are excluded.

Table 29.—Airport Bond Issues, 1978.82

Airport bond issues (millions of 1982 dollars)a

Airports by size and category 1978 1979 1980 1981 1982 1978-82 Percent of total

Commercial:Large . . . . . . . . . . . . . . . . . . . 955 672 186 547 1,036 3,396 67.3Medium . . . . . . . . . . . . . . . . . 280 109 246 188 296 1,119 22.2Small . . . . . . . . . . . . . . . . . . . 25 134 172 70 63 464 9.2

Subtotal . . . . . . . . . . . . . . 1,260 915 604 805 1,395 4,979 98.6General aviation:

Reliever. . . . . . . . . . . . . . . . . 17 1 13 0 8 39 0.8Other . . . . . . . . . . . . . . . . . . . 3 5 2 14 7 31 0.6

Subtotal . . . . . . . . . . . . . . 20 6 15 14 15 70 1.4Total . . . . . . . . . . . . . . . 1,280 921 619 819 1,410 5,049 100.0

148 ● Airport System Development

(14 issues) were sold by special districts and otherjurisdictions (see table 30).

Effects of Airport Size and Type of Traffic

Although airports of all sizes and types partici-pate in the bond market, larger airports do so toa greater extent than smaller ones. Among thelarge and medium commercial airports-togetherserving about nineteenths of all passenger traffic—41 (58 percent) used bond financing for capitaldevelopment over the 1978-82 period (see table31). Moreover, according to Moody’s InvestorsService, all large and medium airports have issuedbonds at some time in the past. Although manysmall commercial airports also use bond financ-ing, this group of airports participates in the bondmarket in only a small way, with just 50 of 489airports (10 percent) issuing bonds over the past5 years. The same is true of general aviation air-ports. Although 43 used bond financing over thepast 5 years, this represents only 2 percent of allfacilities in this class. However, GA reliever air-ports—those identified by the FAA as importantin relieving congestion at major commercial air-ports—appear more likely than other GA airportsto draw on the debt markets to finance capitalimprovements.

In terms of total dollar volume of bond sales,large and medium airports are by far the most pro-minent in the bond market. Of the total amount ofmunicipal debt sold for airport purposes over the1978-82 period, 90 percent was for large andmedium airports, in contrast to only 9 percent forsmall commercial airports. GA airports accountedfor a little more than 1 percent of total airportbond sales.

Table 31.—Use of Bond Market to Raise Capitai,By Airport Size and Type, 1978=82

Number of airports PercentIssuing issuing

Airports by size Total bonds bondsand category existing 1978-82 1978-82

Commercial:Large . . . . . . . . . . . 24 19 79Medium . . . . . . . . . 47 22 47Small . . . . . . . . . . . 489 50 10

Subtotal . . . . . . 560 91 16General aviation:

Reliever. . . . . . . . . 219 9 4Other. . . . . . . . . . . 2,424 34 1

Subtotal . . . . . . 2,643 43 2

Total . . . . . . . 3,203 134 4SOURCES: Bond data adapted by Congressional Budget Office from Public

Securities Assoclatlon, Long-Term Municipal Bond File. The numbersof existing airports by size from the Federal Aviation Administration,as of February 1984.

The role of bond finance in overall investmentalso varies greatly according to an airport’s sizeand type of air traffic served. Over the 1978-82period, investment dollars raised through thebond market for large airports were three timesgreater than the Federal grants awarded these air-ports. At small airports, in contrast, Federalgrants were more than double bond proceeds (seetable 32). Not surprisingly, debt finance plays thesmallest role at GA airports, where it has ac-counted for only about 10 percent of total Federal-plus-private investment over the past 5 years.l”

Although smaller commercial airports relymore heavily on Federal grants than do larger air-ports, they nonetheless undertake a sizable amount

Tabie 30.–Airport Bond issues, By Type of issue and Security, 1978.82

Number of issues

Ch. 7—Airport Funding ● 149

Table 32.-Contribution of Federal Grants and BondIssues to Airport Investment, 1978-82

Percent of investmentAirports by size Federal Bond

and catagory grants issues

Commercial:Large . . . . . . . . . . . . . . . . 18 82Medium . . . . . . . . . . . . . . 27 73Small . . . . . . . . . . . . . . . . 69 31

Subtotal . . . . . . . . . . . . 31 69General aviation:

Reliever . . . . . . . . . . . . . . 80 20Other . . . . . . . . . . . . . . . . 92 8

Subtotal . . . . . . . . . . . . 87 13

Total . . . . . . . . . . . . . 35 65SOURCE: Congressional Budget Office.

of investment through the bond market. For ex-ample, while Federal matching grants to smallcommercial airports totaled about $1 billion (in1982 dollars) between 1978 and 1982—requiring$100 million in local matching funds–small air-ports issued more than $460 million in tax-exemptbonds during the same period, more than fourtimes the amount necessary to match Federalgrants. This means that small airports as a groupused more than three-quarters of their bond pro-ceeds for investments with no Federal financialinvolvement. In contrast, GA airports as a groupappear to raise debt capital only to the extent that,when it is combined with moneys from non-Federal sources, they can meet their Federalmatching requirement.

Underlying Security of Airport Bonds

For most municipal bonds, including bonds forairport development, the bond issuer’s pledge topay interest and to repay principal is generallyprovided in one of two ways:

● general obligation bonds pledge the unlimitedtaxing power and the full faith and credit ofthe State, municipality, or other general-purpose government, while

. revenue bonds pledge the user fee or lesseerevenues generated by the facility to be de-veloped.

General obligation bonds are issued only byStates and other general-purpose governments.Most States limit the amount of general obliga-tion debt that a municipality may issue to a speci-

fied fraction of the taxable value of all propertywithin its jurisdiction. In addition, many Statesrequire voter approval before issuing general obli-gation debt. By contrast, the volume of debtissued through revenue bonds is not included inthe amount of total indebtedness subject to Statedebt limits, and voter approval is usually not re-quired. Revenue bonds generally bear higher in-terest than general obligation bonds because theyare not backed by the full faith, credit and tax-ing power of a governmental unit, and becausethe receipts from user charges are less certain thantax revenues.

In recent years, there has been a dramatic in-crease in the use of tax-exempt revenue bondfinancing. In 1982, for example, revenue bondsaccounted for three-quarters of all tax-exemptbond sales, compared to about one-third in 1970.With the increasing financial pressures on localgovernments to reserve general obligation fund-ing for nonrevenue-producing facilities, revenuebonds represented the vast majority—over 90percent— of the total dollar volume of airportbond sales over the 1978-82 period (see table 33).During this period, the use of general obligationbonds for airport development was most promi-nent among muniapalities and counties, account-ing for over half of their airport developmentissues—though a much smaller fraction of totalproceeds. Revenue bonds predominated, how-ever, accounting for nearly 60 percent of bondssold by all levels of government for airport de-velopment during this period.

In addition to these two basic forms of bond-holder security, a few bond issues combine sourcesof security to produce a hybrid bond. This de-vice offers certain advantages, such as improvedratings and lower interest costs, without placingundue pressure on the municipal debt ceiling. InFlorida, for example, the City of Tampa andHillsborough County lent their credit to the rev-enue bond program undertaken to finance a newterminal at Tampa International Airport by ex-ecuting standby agreements with the HillsboroughCounty Aviation Authority, pledging tax reve-nues to replenish the debt service reserve fund inthe event it had to be drawn down for any rea-son. As further examples, the cities of Charlotte,NC, and Austin, TX, built or expanded terminal

150 ● Airport System Development

Table 33.-Airport Bond Issues, By Type of Security, 1978-82

Airport category and Airport bond issues (millions of 1982 dollars)

bond type 1978 1979 1980 1981 1982 1978-82 Percent of total-

Commercial airports:Large:

General obligation . . . . . . . . . . 30 0 33 10 2 75 2Revenue . . . . . . . . . . . . . . . . . . . 925 672 152 538 1,034 3,321 98

Subtotal . . . . . . . . . . . . . . . . . 955 672 186 548 1,036 3,396 100Medium:

General obligation . . . . . . . . . . 34 7 55 56 5 157Revenue . . . . . . . . . . . . . . . . . . . 246 103 190 132 290 961 :

Subtotal . . . . . . . . . . . . . . . . . 280 109 246 188 296 1,118 100Small:

General obligation . . . . . . . . . . 11 38 42 16 30 137 30Revenue . . . . . . . . . . . . . . . . . . . 14 96 131 54 32 327 70

Subtotal . . . . . . . . . . . . . . . . . 25 134 172 70 63 464 100All:

General obligation . . . . . . . . . . 75 45 130 81 38 370 7Revenue . . . . . . . . . . . . . . . . . . . 1,185 871 473 724 1,357 4,609 93

Total . . . . . . . . . . . . . . . . . . . . 1,260 916 603 805 1,394 4,978 100

Gemeral aviation airports:Reliever

General obligation . . . . . . . . . . 8 1 4 0 6 19 49Revenue . . . . . . . . . . . . . . . . . . . 9 a 9 0 2 20 52

Subtotal . . . . . . . . . . . . . . . . . 17 1 13 0 8 39 100Other

General obligation . . . . . . . . . . 2 4 1 13 4 25 83Revenue . . . . . . . . . . . . . . . . . . . a a a 1 3 5 17

Subtotal . . . . . . . . . . . . . . . . . 2 5 2 14 7 30 100

All airports:General obligation . . . . . . . . . . 86 136 94 47 413 8Revenue . . . . . . . . . . . . . . . . . . . 1,194 8 % 482 725 1,361 4,634 92

Grand total . . . . . . . . . . . . . 1,280 921 618 819 1,409 5,047 100

capital has general obligation backing. And atother GA airports, more than 83 percent of debtfinance is secured in this way.

The larger airports use relatively little generalobligation financing because local governmentstend to reserve such bonds for public services andfacilities that cannot generate sufficient revenuesto cover the costs of debt capital. Similarly, sincea substantial general obligation bond issue canplace enormous pressure on the debt limit and,ultimately, on the credit rating of a municipality,airport operators generally must rely on revenuebonds to finance large-scale airport improve-ments. During the 1978-82 period, the average sizeof bonds issued by large commercial airports was$49 million, compared to $26 million at mediumairports, $6 million at small commercial airports,

Ch. 7—Airport Funding 151

$2.8 million at GA reliever airports, and $0.9 mil-lion at other GA airports (see table 34). Over thesame period, the average size of revenue bondsissued by commercial airports was three to fivetimes greater than the average proceeds of gen-eral obligation bonds used for commercial airportsof the same size category.

Thus, revenue bonds are the dominant form ofdebt financing where investments are large andwhere revenues from airport fees and charges aresufficient to cover debt service requirements. Onthe other hand, at GA airports, where the aver-age size of a bond issue is small (about $1 mil-lion), general obligation bonds far outweigh rev-enue bonds as a means of financing airportimprovements.

The Market for Airport Bonds

The competitiveness of airports in the munici-pal bond market can be gauged by three conven-tional indicators of investment quality:

●

●

bond ratings—a simple system used by ma-jor investor services to grade bonds accord-ing to investment quality (see Box C);interest costs—the interest paid by airportsto attract investors relative to what other mu-nicipal enterprises pay; and

Table 34.—Average Size of Airport Bond Issues,1978-82

Commercial:Large . . . . . . . . . . . . . . . . .Medium . . . . . . . . . . . . . . .Small . . . . . . . . . . . . . . . . .

Category average . . . . .General aviation:

Reliever . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . .

Category average . . . . .

10.7 53.6 49.212.1 32.0 26.03.2 9.3 6.05.9 36.3 26.2

3.8 2.2 2.81.0 0.5 0.91.5 1.3 1.4

All-airport average . . 4.5 31.7 21.2

. defaults—the frequency with which a giventype of enterprise has defaulted on a bondissue.SOURCE: Congressional Budget Office.

25-420 0 - 84 - 11

——.

152 ● Airport System Development

Bond Ratings

For the 134 airports where new airport bondswere issued over the pasts years (including gen-eral obligation bonds used at least in part for air-port development), every rated bond has receivedan “investment grade” from the two major invest-ment rating services, Moody’s Investors Service,Inc., and Standard & Poor’s Corp. (See table 35for ratings of the most recent airport issues.)” One

explanation for these consistently good ratings isthat airports expecting poor ratings do not enterthe bond market.

Although investors clearly have considerableconfidence in airport bonds, ratings vary betweenthe top and medium grades. A medium grademeans that rating firms see the investment as car-rying a measure of speculative risk. As shown intable 35, general obligation bonds draw the bestratings. Under this form of security, ratings aredetermined by the economic vigor of the munici-pality or the entire State, and airports have littleor no influence on the rating. Revenue bonds, onthe other hand, draw ratings according to thefiscal vitality of the airport itself. Since more than90 percent of all airport bonds (in terms of dollarvolume) are secured with airport revenues, the cri-

( c o n t i n u e d )

nonreliever GA airport revenue bonds were sold privately andwithout ratings. This is a reflection of the smaller average size ofbond issues for small airports. For such airports, rating costs repre-sent a greater percentage of the total bond sale.

Table 35.–Airport Bond Ratings, 1978=82

Rating received (percent)

330

676

089

00

500

00

5065

018

018

110

364

2114

77

2575

190

323

2449

58

1940

General aviationReliever:

General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

Other:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

All:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

00

200

2020

00

6080

00

80

350

40

63100

00

100

247

30

6293

NOTE: Data reflect ratings of the most recent issue of each bond type by all airports represented. The few airports that used both types in this period appear twice,No airport bonds rated below Baa by Moody’s Investors Service were issued during 1978-82.

SOURCE: Congressional Budget Office.

Ch. 7—Airport Funding 153

teria used by investor services to rate such bondsare central to the marketability of such bonds.

Credit analysts at the major investor servicesrate an airport revenue bond according to a va-riety of factors, including the financial perform-ance of the airport, the strength of passengerdemand, and use agreements with the airlinesserving the airport .13 Financial strength is viewedas a direct function of passenger demand at theairport, and credit analysts review both financialindicators and underlying patterns of passengertraffic. *4

Airline deregulation, which has freed air car-riers from virtually all obligation to serve particu-lar airports, has caused some shift in the relativeweight credit analysts give to these different fac-tors. In response to deregulation, the investorservices today place greater emphasis on local eco-nomic strength than on airport use agreementsand the financial stability of the airlines servingan airport. The rationale is that, if one airlinewithdraws service, a strong local economy wouldattract other airlines to pick up the travel business.

In view of the methods adopted by the investorservices, it is not surprising that large airports—with their comparatively stronger financial show-ings—tend to draw the best revenue bond ratings.Over the 1978-82 period, credit analysts were farmore likely to assign medium-grade revenue bondratings to issues for medium and small airports

than for large airports. In fact, over that period,not a single large airport issuing debt was ratedbelow the upper-medium category.

Since deregulation, bond rating organizationshave emphasized that passengers are an airport’strue customers and that sufficient passenger de-mand will provide financial incentives for someairline to offer service over the long term. In par-ticular, for origin-destination airports (those atwhich most passengers either begin or end theirjourneys) in strong travel markets, the financialfailure of one carrier might have no influence onthe airport bond rating. For example, when Dallas-Fort Worth Airport sold $157 million of revenuebonds in November 1982, it retained its A ratingfrom both Moody’s and Standard & Poor’s de-spite the collapse of Braniff Airways earlier thatyear. Braniff had held a significant share of theDallas-Fort Worth market and, under a residual-cost use agreement, had agreed to pay a substan-tial portion of the total airline share of airportcosts. Moody’s municipal credit report on theissue cited the bond’s security provisions, the ade-quacy and diversity of pledged revenues, and theairport’s role as one of the major facilities serv-ing a strong Southwestern economy. The reportconcluded that this “combination of the sufficientrevenues for all requirements and increases inscheduled commercial airline service offset the po-tentially adverse effects following cessation ofoperations this past spring of the former domi-nant airline serving the area. ”l5

For hub airports serving large numbers of con-necting flights, however, the poor financial out-look for a major airline could mean a permanentloss of patronage, with important implications forbond ratings. In May 1983, for example, Moody’srevised the rating of Atlanta Hartsfield on approx-imately $86 million “third-lien” revenue bondsdownward from A to Baal, citing as the primaryreasons Eastern Airline’s financial problems (re-flected in a net loss of $113.8 million in fiscal year1982), a trend of declining traffic, and reduceddebt service coverage. Likewise, for the Salt LakeCity Airport, Moody’s downgraded its rating in

154 . Airport System Development

connection with the sale of $26 million in reve-nue bonds, stating that the long-term security ofthe bonds must be viewed with uncertainty in lightof the airport’s growing reliance on connectingpassengers carried by the financially troubledWestern Airlines.lb In addition, while strengthen-ing and expansion of hub-and-spoke networks bymajor airlines since deregulation has improvedgross revenues at some airports, the added vol-ume of connecting traffic has also prompted theneed for airport expansion programs.

In the view of the bond rating analysts, the fi-nancial picture has not improved significantly forthose airports that have experienced the greatestgrowth in operations—and dramatic increases indebt financing requirements-since deregulation .1’For example, Standard & Poor’s published creditrating on the December 1982 issue of $185 mil-lion of revenue bonds at Denver Stapleton statedthat the issue is not rated higher than A “ . . . be-cause of current uncertainties surrounding futureairport expansion and the substantial cost asso-ciated with whichever alternative is pursued. ”Similarly, Standard & Poor’s published report onthe recent sale of $175 million revenue bonds forChicago O’Hare stated that “ . . . the primaryconcern is the magnitude of the capital programbeing undertaken at the airport, which is expectedto cost $1.2 billion by 1990. ” For this reason, theChicago-O’Hare bond issue was also denied bet-ter than art A rating.18

Interest Costs

The difference between interest costs paid byairports and by other public enterprises indicatesthat airports generally hold a strongly competi-tive position in the municipal bond market. Asshown in table 36, airport interest costs for reve-nue bonds over the 1978-82 period were 70 “basis

. .—16 Moody's Investors Service, Inc., Municipal Credit Report, for

Salt Lake City, UT, Airport System, May 23, 1984. Moody’s alsocited the uncertainty caused by a dispute among carriers servingSalt Lake City concerning the allocation of costs for new terminalfacilities at the airport-a dispute that now appears settled.

17 Cited by Ann Sowder, Smith Barney Harris Upham & Co.(formerly with Standard & Poor’s), in a presentation at the 55thAnnual Confenmce of the American Association of Airport Ex-ecutives, Orlando, FL, June 1983.

18 Another factor in the revisionof the revision of the rating for Chicago O’Harewas evidently the reduced level of coverage on the new bonds com-pared to that for the airport’s older revenue bond issues.

points” below the interest cost index for all reve-nue bonds. (A basis point is one one-hundredthof a percentage point. ) Even general obligationbonds issued in whole or in part for airport de-velopment brought below-average interest costsover that period-perhaps reflecting that munici-palities with airports tend to be economicallystronger than other places.19

Like municipal bonds in general, airport bondsare sold and traded at prices that reflect both gen-eral economic conditions and the credit qualityof the airport or (in the case of general obliga-tion bonds) the creditworthiness of the issuinggovernment. Rated revenue bonds are offered forsale in one of two ways. Under competitive bid-ding, the airport selects the lowest bid and thusobtains funds at the lowest cost of borrowing.Under a negotiated sale, the bond purchaser con-sents at the outset to purchase the bonds at anagreed price. 20 In either case, the entire bond issue

is usually purchased by an underwriter (com-monly, an investment brokerage company) or anunderwriter team who, in turn, markets the bondsto institutional and individual investors.

In deciding the price of a particular bond issue,underwriters identify a “ballpark” interest rate onthe basis of general market conditions and thenrefine this estimate according to the credit stand-ing of the airport in question. General market con-ditions represent by far the most important deter-minant of interest costs on airport revenue bonds,

Ch. 7–Airport Funding ● 1 5 5

Table 36.—Comparison of Interest Rates for Airport Bonds and Other Municipal Bonds, 1978-82

Airports by size and Difference (in basis points)a

category and bond type 1978 1979b 1980 1981 1982 1978-82

CommercialLarge:

General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

Medium:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

Small:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

All:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

General aviationReliever:

General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

Other:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

All:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

All airports:General obligation. . . . . . . .Revenue . . . . . . . . . . . . . . . .

– 6 4N/Ad

c

19– 109

–66– 115– 166

– 138–12

–95–55

–80NIA

– 4 5– 117

–73–46

6–13

–34–29

411

–71N/A

– 4 6– 8 4

–50– 189

– 183– 133

– 101– 132

–82– 153

–71NIA

–46–29

–70–98

– 102– 124

–85–28

– 7 3– 6 8

76N/A

– 106c

–32–47

c

c

c

–643

–55

–89NIA

–37c

– 138–243

–46–113

39–60

–53– 107

–48NIA

– 4 7c

–85– 145

–46–113

39–61

–43–92

–63NIA

–46–29

–73– 103

–89– 123

–66–32

–65–70

SOURCE: Congressional Budget Office.

and in this respect airports have little control overthe cost of capital. Airport revenue and generalobligation bonds issued over the 1978-82 periodfollowed quite closely the interest cost indicatorsof revenue or general obligation bonds as a whole,going from a low of 5 percent in 1978 to a highof nearly 15 percent in 1982. In fact, statisticalanalysis indicates that each 1 percent change inthe overall market rate of interest for tax-exemptmunicipal bonds leads to roughly a 1 percentchange in interest rates for airport bonds (see app.D). Of course, interest costs differ depending onthe type of underlying security and the numberof years until the bonds mature. CBO’S analysisindicates that, other things being equal, generalobligation bonds for airport purposes draw in-terest costs that fall about 9 percent below the in-terest paid on revenue bonds.

Within the range of interest costs dictated bymarket conditions, underwriters refine their bids

on airport revenue bonds on the basis of the creditstanding of the individual airport. Two factorshave greatest importance here: the airport’s basicfiscal condition (including its prospects for traf-fic growth and the strength of the local economicbase) and the presence of special pressures on theairport to expand capacity, thereby necessitatingextensive capital development.

In general, an airport’s basic fiscal condition ap-pears to be more important than long-term air-line use agreements. For example, airports usinga compensatory approach to financial manage-ment—which tend to have stronger overall finan-cial performance and shorter term use agreementsthan residual-cost airports—drew revenue bondinterest costs that were 95 basis points below otherrevenue bonds over the 1979-82 period (see table

.

156. Airport System Development

37).21 In contrast, residual-cost airports paid only4 basis points below other municipal revenuebonds.

On average, larger airports pay lower interestcosts than smaller airports, allowing for differ-ences in types of security and average maturitiesof issues.22 However, there is considerable varia-tion in the interest costs paid by airports of dif-ferent size in the 5 years since airline deregula-tion. Compared to small airports, large commercialairports have generally incurred somewhat higherinterest costs for new bond issues, despite theirhistory of more favorable bond ratings. For ex-ample, in the period 1978-82, the interest on rev-enue bonds paid by large airports was 55 basispoints less than the market average, compared to153 basis points less for small airports. Mediumairports drew higher interest costs, on average,than either large or small commercial airports-29basis points below the market average for reve-nue bonds.

This pattern appears to reflect two factors. First,the market is wary of increasing expansion needsat the Nation’s major hub airports and of the pres-sure that future investments could exert on theavailability of airport revenues to service out-standing debt. Indeed, from table 36, it appearsthat medium airports have incurred the greatestincrease in interest costs, a pattern that goes alongwith their mounting debt-to-asset ratios. Second,the size of the average bond issued by large air-ports far exceeds that of smaller ones, and under-writers’ bids usually reflect an interest premiumin such cases to cover the added risks of market-ing such a large volume of bonds. In the deter-mination of interest rates, such premiums alone

21 Part of this difference is attributable to revenue bonds issuedby the Port Authority of New York and New Jersey. These bondsare backed by revenues from all Port Authority operations and notjust airport revenues. Even excluding these bonds, however, com-pensatory airports had interest costs 47 basis points lower than otherrevenue bonds.

22 In technical terms, the elasticity of interest cost with respect toairport size averaged about –0,013 over the 1978432 period. Thismeans that an airport with 10 percent more passenger boardingsthan another airport would draw about a 0.13 percent lower in-terest rate on its bonds.

Table 37.—influence of Financial ManagementApproach on Airport Bond Interest Rates, 1978-82

Difference (in basis points)a

Residual-cost Compensatoryairports airports Total b

General obligation. . . . –37 –83 –65Revenue c . . . . . . . . . . . –4 –95 –70

could offset the moderately higher bond ratingsachieved by larger airports.

DefaultsThe history of an enterprise, or of an entire in-

dustry, with regard to the number of defaults isan important index of investment value. By thismeasure, the record of airports is particularlystrong. The airport industry has never suffereda single default, a fact noted by several creditanalysts in citing the premium quality of airportsas credit risks. One analyst has put it as follows:

Airport revenue bonds have a remarkable trackrecord. In spite of recessions, inflation, oil em-bargoes, fare wars, deregulation, astronomical in-creases in the price of aviation fuel, increasinglydifficult community-airport relationships, costlynoise mitigation programs, slot restrictions, a con-trollers’ strike, curfews, threats about antitrust ex-posure, and the like, the Nation’s airports haveshown that they can meet the challenges, copewith change, and consistently make payments ontheir outstanding debt. The industry has survivedwithout a single default. The investment commu-nity has had its “seasoning” with airport revenuebonds. As a result of the positive experience, thereis a great deal of “comfort” in airports as creditrisks today .23

“R. H. Bates, “Airport Financing: Whither (or Wither?) theMarket?” presented at Airport Operators Council InternationalEconomic Specialty Conference, Sacramento, CA, Mar. 31, 1982.

Chapter 8

FORECASTING AND TRENDS

Photo cradt: Dorn McGrath, Jr.

Contents

PageAviation Demand Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Methods of Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159The FAA Aviation Forecasting System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163Limitations of Aviation Demand Models.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Recent Trends in the Airline Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169Changes in Airline Industry Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170Changes in Route Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172Formation of New Hubs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174Aircraft Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Implications for Airport Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

List of Tables

Table No. Page38. FAA Forecasts of Aviation Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16439. Summary of FAA Forecasts, 1959-83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16540. Domestic Airlines by Class of Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17141. Changes in Stations Served by Air Carriers, 1978-81 . . . . . . . . . . . . . . . . . . . . 17342. Comparison of Hubs Served by Selected Carriers, 1978 v. 1982 . . . . . . . . . . 17343. Aircraft Departures by Hub Size. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17444. Weekly Departures and Seats, by Hub Size, 1978-83 . . . . . . . . . . . . . . . . . . . . 17545. Changes in Weekly Departures Between Major Categories of Airports . . . . . 17646. Present and Future Commercial Jet Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . 18247. Aircraft Operated by Commuter and Regional Airlines, 1970-81 . . . . . . . . . . 184

List of Figures

Figure No. Page19. Hub and Spoke Route System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17720. Western Airlines Activity at Salt Lake City . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17921. Composition of U.S. Commercial Jet Fleet, 1982 . . . . . . . . . . . . . . . . . . . . . . . . 18022. Age of Aircraft in Service in U.S. Commercial Jet Fleet . . . . . . . . . . . . . . . . . 18123. Composition of Commuter Aircraft Fleet, 1981 . . . . . . . . . . . . . . . . . . . . . . . . . 183

Chapter 8

FORECASTING AND TRENDS

Prudent management must take into accountfuture events and conditions. Often their naturecan be anticipated by analyzing events of the re-cent past and applying techniques to project theeffects of these trends into the future. The firstpart of this chapter reviews forecasting techniquescommonly used in aviation planning and describestheir use by airport operators, air carriers, and

AVIATION

Methods of Forecasting

government agencies. The second part discussesrecent events and emerging trends in the aviationindustry that will color future forecasts. These in-clude the effects of deregulation, changes in routeand service patterns, and the lingering effects ofthe air traffic controllers’ strike. The final part ofthe chapter speculates on how these trends mayaffect the future needs of airports.

DEMAND FORECASTING’

An aviation demand forecast is, in essence, acarefully formed opinion about future air traffic.Its primary use is in determining future needs orestimating when they must be met. Any of sev-eral methods may be used, with results that willvary widely in terms of scope, time scale, struc-ture, and detail; but they have certain commonfeatures. Chiefly, forecasts are derived from as-sumptions about the relationship of the past andthe future in that they postulate that certain meas-urable historical events or conditions have acausal or predictive relationship with events orconditions that will be of interest in the future,Analysis of these historical factors—usually bysome sort of mathematical manipulation of data—allows the forecaster to express expectations interms of some measure or index of aviation activ-ity. From this initial product (e. g., expected pas-senger travel, cargo volume, or aircraft opera-tions) the forecaster can derive further estimatesof the nature, magnitude and timing of futureneeds for equipment, facilities, manpower, fund-ing, and the like. Even though the method usedmay be quite rigorous and mathematically com-plex, forecasting is inherently a judgmental proc-ess where uncertainty abounds. The best that theforecaster can achieve is to be aware of his biases,to identify the sources of uncertainty, and to esti-mate the probable magnitude of error.

‘This section is based in part on a paper prepared for OTA byDavid W. Bluestone, John Glover, Dorn McGrath, Jr., and PeterSchauffler.

In setting out to prepare a forecast, the fore-caster has at his disposal two basic types of in-put data. He may choose data on aviation activ-ity itself and use historical performance trends toproject future activity. In effect, this approachassumes that the best predictor of future aviationdemand is past aviation demand. Alternatively,the forecaster may choose data related to underly-ing economic, social, and technological factorsthat are presumed to influence aviation demand,treating them as independent variables that canbe used to predict demand as a dependent vari-able. Among the factors that may be so used are:

●

●

●

basic quantitative indicators, such as popula-tion, gross national product (GNP), activityof certain sectors of the economy, personalconsumption expenditures, or retail sales;derived socioeconomic and psychological in-dexes, such as propensity to travel, incomeclassifications, employment categories, edu-cational levels, or family lifestyles; andsupply factors, such as fare levels, aircraftcharacteristics (size, speed, and operatingcosts), schedule frequency, or structure of theair carrier industry.

The outputs of the forecast are measures ofaviation activity—passenger enplanements, rev-enue passenger-miles, freight ton-miles, numberof aircraft in the fleet, or number of aircraft oper-ations. Other output measures, such as air car-rier revenue, air traffic control (ATC) workload,and demand for airport facilities can be derivedfrom these estimates.

159

I& I . Airport System Development

The range and scope of forecasts can varygreatly, depending on the purpose they are toserve. They might include all aviation or be lim-ited to a particular type of traffic (passenger orcargo) or a particular type of operator (scheduledair carrier, charter, or general aviation). The geo-graphical scope may be international, nationwide,regional, or limited to a particular market orairport.

The forecasting horizon may range from a fewmonths to 20 years, again depending on the pur-pose of the forecast. Airlines, for example, tendto use very short-term projections of traffic in or-der to estimate their financial or staffing needs ona quarterly or semiamual basis. Airport planners,on the other hand, use very long-range forecasts,on the order of 20 years, as a basis for major deci-sions relating to land acquisition and airport de-velopment. Between these extremes, forecastinghorizons of 1,5, or 10 years are common for plan-ning changes and improvements of airport facil-ities, estimating ATC workload, projecting airearner fleet requirements, and financial planning.

There are two basic approaches to aviation de-mand forecasting— “top-down” or “bottom-up.”The top-down approach begins with the largestaggregates of economic and statistical data (usu-ally national totals) and seeks to provide a gen-eral picture of aviation demand spanning thecountry and the entire system of air travel routesand facilities. Once the aggregate forecast has beendeveloped, portions of the total volume of traf-fic can be allocated to specific industry segmentsor geographical regions based on historical sharesor assumed growth rates.

The bottom-up approach, in contrast, beginswith data for a specific geographic area and de-velops a forecast of aviation demand at a particu-lar airport or in a metropolitan region, typicallyas an indicator of need for building or expandinglocal facilities. Where good data are available andthe economy of the region is developing in an or-derly way, this approach can closely approximatethe reality of the area under study. In some cases,a number of such bottom-up forecasts may becombined to make a composite forecast for alarger area, but this approach of building up aregional or national aggregate from many local

forecasts can lead to difficulties. For example,forecasts for some areas may be overly optimistic—often a defensive strategy designed to assureadequate future capacity. It is not unusual to findthat the sum of many such bottom-up forecastsexceeds the top-down forecast for the region bya wide margin.

Whether “top-down” or “bottom-up,” aviationdemand forecasting as practiced today uses a widevariety of methods. The attributes, limitations,and typical applications of these methods are dis-cussed below.

Time Trends

A simple forecasting method is the extrapola-tion from the past, where the forecaster assumesthat major trends, such as traffic growth or mar-ket share, will continue uninterrupted and thatthe future will be like the recent past. Historicaldata for some base period are gathered and ana-lyzed to determine a trend line, which is then ex-tended to some point in the future, using eithersophisticated mathematical procedures or simpleestimation of the most likely course. This methodis often used for short-term projections (1 or 2years) where basic conditions are unlikely tochange much. It is also better than no forecast atall in cases where a data base suitable for moresophisticated methods is not available. However,a basic shortcoming of trend extrapolation is thatit does not take into account underlying economic,social, and technological factors that affect avia-tion and that are themselves subject to change.

Econometric Models

The econometric model is by far the most fre-quently used method for forecasting aviation de-mand. It is a mathematical representation of airtraffic or its constituent parts and those independ-ent variables of the national economy which arethought to influence traffic growth. Econometricsis the statistical technique used to quantify theserelationships. The mathematical equations of themodel relate economic factors to the level of avia-tion activity, based on observation of past be-havior of both the economy and the aviation in-dustry. The equations may also be constructedso as to reflect the effects of specific factors within

Ch. 8—Forecasting and Trends “ 161

*4 - - . . , “ - ’

Photo credit: Federal Aviation Administration

Newark: the alternative to La Guardia and Kennedy

the air transportation industry itself, such as farelevels, route configurations, fuel costs, etc.

Among Federal Government agencies, both theFederal Aviation Administration (FAA) and theCivil Aeronautics Board make extensive use ofeconometric forecasting methods. Econometricmodels are also used by airlines, industry asso-ciations, and aircraft manufacturers. TWA, forexample, employs a set of econometric models toforecast passenger travel industrywide and, fromthat, TWA’s prospective market share. The Asso-ciation of European Airlines uses a mathematicalmodel in which traffic varies directly with grossdomestic product and inversely with average rev-enue per passenger. McDonnell Douglas, Boeing,and Lockheed all have their own versions ofeconometric models to project future sales of air-craft. The equations for the McDonnell Douglasmodel, for instance, include the ratio of long- toshort-term interest rates since the cost of borrow-ing money has an effect on the ability of airlinesto purchase aircraft.

Gravity Models

The gravity model was first developed in thesociological and marketing fields to describe var-ious forms of human interaction. The techniquewas later adapted by traffic engineers to describetravel behavior. It is predicated on the assump-tion that travel behavior obeys a law analogousto the law of gravity, in that attraction betweencities varies directly with population and inverselywith distance. Thus, two large cities located nearone another have a strong mutual attraction andform a very dense transportation market; smallcities located far apart have little travel betweenthem. The gravity model uses socioeconomic datafor each pair of metropolitan areas to predict thelevel of transportation activity between them. Theequations often contain terms to describe thespecial attractiveness of each city for differenttypes of personal and business trips.

Although gravity models have been used ex-tensively in highway planning, their use for avia-tion forecasting is limited. The State of Califor-

— — —

162 . Airport System Development

nia uses a gravity model in its State AirportSystem Plan in an effort to give a statewide “sys-tem view” of air transportation. The Californiagravity model takes into account changes in popu-lation, employment level, and income of majormetropolitan areas to produce estimates of thetravel that will be generated between various partsof the State. To provide consistency among plansfor all transportation modes, a similar gravitymodel incorporating the same socioeconomicvariables is used for other transportation forecast-ing within the State.

Scenarios

The scenario method isstrate the variation due to

often used to demon-differing assumptions

about future conditions, thus bracketing the-rangeof uncertainty. The values of input variables inan econometric model, for example, are in them-selves simply guesses about the future behaviorof the economy. Rather than depend on a single“best” estimate of GNP in future years, the fore-caster may elect to construct several scenarios topredict the behavior of the aviation industry undera range of likely economic conditions. FAA beganusing this method in 1976 in an attempt to describeconditions that could affect the future of air trans-portation, and most FAA forecasts since that timehave included different scenarios incorporatingdivergent assumptions about the economy and theairline industry.

One of the drawbacks of the scenario methodis that the range between high and low estimatescan be so large that the forecast loses practicalvalue as a guide to planning. For example, in theinitial 1976 FAA study, where five scenarios wereused, the high estimate of revenue passenger-mileswas 2.3 times the low estimate, and the ratio ofhigh to low forecasts of aircraft operations was2.9.

Ratios

Some local aviation authorities and industrygroups make forecasts by the relatively simple ex-pedient of assuming a ratio between national “top-down” traffic forecasts and their own segment oftraffic. This method is often used by airports thatlack the funds or expertise to make independent

econometric forecasts. A notable application wasin 1969, when the major U.S. air carriers devel-oped a national forecast on a consensus basis andthen allocated portions of the traffic to each of22 major air transportation hubs. The allocation,based on the historical share of national trafficcaptured by each hub, was adjusted by expertjudgment to account for shifting patterns of air-port use.

Market Surveys

This method has been used extensively by thePort Authority of New York and New Jersey forthe past 25 years. The Port Authority uses in-flightpassenger surveys to gather information on pointof origin, choice of airport in the metropolitanarea, choice of ground access mode, ground ac-cess travel time, destination, purpose of trip, andother factors that can be used to predict travelbehavior and consequent demands on aviation fa-cilities. These data are classified in a travel mar-ket model made up of over 100 socioeconomic“cells” defined by age, occupation, income, andtrip purpose. The growth rate for each cell is pro-jected by straightforward econometric ”techniques.

The market survey method, while it producesa highly detailed forecast of travel, has some sig-nificant drawbacks. Data collection is compli-cated, time-consuming, and expensive. Since thesample is collected in a relatively brief period, itmay not be truly reflective of long-term travel pat-terns and preferences. Airlines, which serve as col-lectors of the data, are reluctant for competitivereasons to relinquish control of survey resultswhich they consider proprietary.

Judgment

To some degree, judgment enters into all fore-casting. Even the most formal and scientific fore-casting methods require that assumptions be madeabout future conditions and events. These as-sumptions, which represent the forecaster’s basicoutlook, are simply informed judgments, and theycan have a powerful effect on the outcomes. Judg-ment also enters into the forecasting process inother ways: on the methodology to be employed,on the trends to be assumed, on the selection ofyears to use as a base period, on the choice of data

Ch. 8—Forecasting and Trends ● 163

Photo credit: federal Aviation Administration

Commuter airline in Alaska

sources, and on likely changes in specific factorssuch as fuel availability, cost, and technology. Atthe completion of a forecast it is not uncommonto subject the results to the test of expert judg-ment and to adjust them in the light of what seems“reasonable. ”

Application of judgment has, in at least twocases, become institutionalized as part of the fore-casting process. U.S. airlines generally use econo-metric models for traffic forecasts and fleet plan-ning; but since they do not agree on method andinitial assumptions, the Air Transport Associa-tion (ATA) develops a consensus forecast basedon the judgment and practical experience of air-line personnel and the ATA forecasting workinggroup. The International Air TransportationAssociation (IATA) uses a modified “Delphi” tech-nique to produce forecasts for international pas-senger and freight traffic. Delphi is a method forattaining consensus among experts, in this casethe forecasters from participating IATA memberairlines. Using this technique, initial estimates areobtained from each expert. These estimates arearranged in a composite that shows each partici-pant how his forecast compares to the group asa whole, and each is invited to submit anotherforecast based on this information. After one ormore rounds of comparison and feedback, judg-ments begin to converge, and a consensus fore-cast is reached.

The FAA Aviation Forecasting System

The most elaborate aviation demand forecastsproduced in this country are those of the Federal

Aviation Administration. They consist of na-tional, regional, and individual airport forecaststhat typically cover a 12-year period, although20-year forecasts are sometimes prepared. Theseforecasts, updated and issued annually, providethe basic context for aviation demand forecast-ing in the United States. They are used, with avariety of specialized interpretations, by all ele-ments of the aviation community.

In addition to the basic annual forecasts, FAAalso publishes special studies and forecasts fromtime to time. Subjects covered recently have in-cluded air cargo activity (1979), commuter air-line activity (1977 and 1981), and forecastingneeds at the State level (1979). FAA has also pub-lished special “profile” reports on hourly airportactivity, air carrier operations, and internationalpassengers. In 1978, FAA began a series of in-dividual forecasts for 24 large hub airports. Theseare adaptations of other FAA forecasts, withspecial sections on local economic growth, pas-senger enplanements, cargo and mail enplaned,general aviation (GA) and air carrier aircraft oper-ations, and traffic handled by FAA towers.

FAA National Forecasts

Each year FAA publishes a national forecast en-titled FAA Aviation Forecasts. The most recentedition (released in February 1984) includes de-tailed year-by-year forecasts from 1984 to 1995for air carriers, air taxis and commuters, GA, andmilitary aviation. It also contains workload fore-casts for airports with FAA control towers, airroute control centers, and flight service stations.

The 1984 forecasts anticipate that enplanementsby major airlines will grow at an average annualrate of 4.6 percent. Larger aircraft and higher loadfactors will minimize actual increases in opera-tions to accommodate this growth, with the re-sult that FAA projects air carrier operations togrow by no more than 1.7 percent per year. Largergains are expected for commuter carriers, whoseenplanements are expected to increase by 7.4 per-cent per year and operations by 4.7 percent peryear. GA operations are expected to increase by6.0 percent annually. The current FAA forecastsare summarized in table 38.

164 Airport System Development

. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .

.

. .. .. .. .. .. .. .. .. .. .. .. .“ -“ ( n. -

.L . .a). .

x

Ch. 8—Forecasting and Trends 165

As part of the documentation for these annualforecasts, FAA sets forth the basic assumptionsconcerning the industry, government, and eco-nomic environment for the forecast period. Theprincipal indicators—gross national product,Consumer Price Index, and fuel price index—arecomposites of estimates obtained from four lead-ing nongovernmental economic forecasting orga-nizations: Chase Econometrics, Data Resources,Evans Economics, and Wharton EconometricsAssociates. FAA believes that this consensus ap-proach to formulating input assumptions lendsgreater credibility to the forecasts.

The air carrier portion of the forecast is devel-oped in several steps. For airline travel, FAA firstforecasts passenger yield (cost per passenger-mile)based on estimates of three independent variables:jet fuel prices, average airline wages, and avail-able seat-miles per aircraft. The next step is toforecast passenger demand, based on GNP andyield. Third, FAA develops forecasts of aircraftoperations based on load factor, average seats peraircraft, and passenger trip length, all of whichare estimated in consultation with industry ex-perts. Forecasts for itinerant operations, instru-ment operations, and other FAA workload meas-ures are developed from the basic forecast of totalaircraft operations, using empirically derived rela-tionships.

Past FAA forecasts have often been criticizedfor inaccuracy or unrealistic assumptions aboutfuture growth of aviation. An examination of thisquestion was made in a recent CongressionalBudget Office study of FAA forecasts since 1959.2

CBO divided the forecasts into three distinct peri-ods (see table 39). CBO found that the forecastsperformed between 1959 and 1965 were consist-ently low by an average of almost 19 percent.From 1966 to 1973 the forecasts swung sharplythe other way and consistently overestimated thegrowth of aviation activity by nearly a third.From 1974 on, which coincides with the time thatFAA has been using more sophisticated econo-metric modeling techniques, the results have beenmixed, sometimes too high and sometimes toolow. Overall error has averaged about 21 percent,somewhat smaller than in the previous period butstill rather large for this type of forecasting. FAAforecasts for the GA sector have been especiallyunreliable and consistently high, sometimes by asmuch as 50 percent. On balance, CBO concludesthat FAA’s forecasts have improved substantiallyin the past 10 years, showing a reasonably smallrandom error instead of the constant high or lowbias that characterized forecasts of the earlier twoperiods.

Table 39.–Summary of FAA Forecasts, 1959-83

Periods in whichforecasts made Method Performance 5 years ahead Market environment

1959-65 Trend forecasting: unspecified Average error – 18.7 percent Expanding, prosperous economy.links to economy, business Worst year –32.5 percent Rapidly growing population.cycle, population, fares, Declining first-class and coachcompetition from other modes fares, (declining unit costs

because of increasing use ofjets).

1966-73 Trend forecasting: unspecified Average error +32.5 percent Softening trends in aviationlinks to economy, business Worst year +58.4 percent activity. Increasing ticket taxes,cycle, population, fares, rising fares. Forecasts made incompetition from other modes 1969 (published January 1970)

assumed 4.25 percent growthrate in 1973, to continue at thatrate through decade. Inflation 2percent per year from 1973.

From 1974 Linear econometric models Average error +21.2 percent Airline deregulation, economicWorst year +34.7 percent recession, fare wars, and

166 ● Airport System Development

Terminal Area Forecasts

FAA Terminal Area Forecasts (TAFs), like FAAnational forecasts, are developed annually. TheTAF data base contains descriptive informationand forecasts for about 4,000 airports-the 3,200eligible for Federal aid and about 800 other public-use airports. Each airport record includes at least5 years of historical data and a 12-year forecastof aircraft operations, broken down into air car-rier, commuter, GA, and military categories. Theprojections for individual airports can also be ag-gregated to form State and regional forecasts.

The TAFs constitute a subroutine of the basicFAA “top-down” forecasts of national aviationdemand. The process for developing TAFs hasbeen refined in recent years, and they now serveas the basic frame of reference for other types of“bottom-up” forecasts undertaken by many localairport authorities and State and regional agen-cies. Not all local airport authorities, however,accept the validity of TAFs, which they believedo not adequately take into account the factorsaffecting aviation demand at the local and regionallevel and which are not, in their view, developedthrough appropriate consultation with local au-thorities.

The Special Problem of GA Forecasting

FAA forecasts GA demand in two segments—business aviation and personal flying. For busi-ness aircraft, the forecast is based on the real priceof aircraft, interest rates, and measures of busi-ness activity such as manufacturing and retailsales. For personal flying, the factors used are air-craft price, interest rates, and GNP as a measureof income. Itinerant operations are forecast as afunction of the size of the fleet and the real costof fuel. Instrument operations are a function offleet size. Local operations, predominantly train-ing operations, are a function of the number ofstudent pilots and the number of aircraft in thefleet. FAA has concluded that because of large andsomewhat unpredictable oscillations in all thesevariables, econometric models do not producereliable forecasts of general aviation. As a prag-matic approach, FAA uses modeling only as apoint of departure to produce first approximationsthat are subsequently adjusted with data from

periodic surveys and estimates from FU regionaloffices and industry representatives.

Some observers are of the opinion that FAA’sgeneral aviation forecasts are unrealistically high.For example, recent FAA forecasts estimate thatthe GA fleet will grow at a rate of 3.3 percent peryear for the remainder of this century.3 Thismeans an expansion of the GA fleet from about210,000 aircraft in 1983 to 269,000 in 1990 and385,000 in 2000. Such a growth rate is extremelyoptimistic, and realizing it would require an un-precedented level of manufacture and sale in theGA aircraft industry. An increase of 175,000 air-craft in the GA fleet by the end of the centuryis equivalent to adding 10,000 new aircraft peryear—13,000 if allowance is made for replacementof existing aircraft at the rate of 1 percent an-nually. When foreign aircraft sales are taken intoaccount, the FAl forecast implies that U.S. firmswould manufacture and sell about 16,000 aircraftper year between now and 2000. This seems unlikelyin light of performance over the past 15 years inthe GA aircraft manufacturing industry wheresales (including exports) have averaged only two-thirds of this amount. A

Limitations of AviationDemand Models

Aviation demand models can be very usefulforecasting tools, but it is important to recognizetheir limitations. First, all models are necessarily

incomplete. They attempt to reduce a large andcomplex system to a relatively few mathematicalequations that describe the most important in-teractions. Many factors must be left out, eitherbecause they are difficult to formulate mathe-matically or because including them would makethe model cumbersome and too complicated touse. There are other factors excluded not by de-sign but by inadvertence because, with the pres-ent state of knowledge about the relationship be-tween aviation and underlying economic andsocial forces, we are simply unaware of all thefactors that drive demand for air transportation.

3National Airspace System Plan (Washington, DC: Federal Avia-tion Administration, April 1983, revised edition), p. II-2.

4Aerospace Facts and Figures, 2983/84 (Washington, DC: Aero-space Industries Association, 1984), p. 33.

Ch. 8—Forecasting and Trends 167

To guard against such structural weakness, themodel builder calibrates and tests the model byinserting data from past years to see if the his-torical record can be accurately reproduced. If themodel is well constructed and its mathematicalrelationships are a good representation of reality,using data from some past year in the equatiorlswill yield a forecast of the aviation activity thatactually occurred. Such testing gives the forecasterconfidence that for some future year the modelwill correctly predict aviation activity if the cor-rect values of input variables are used. Unfortu-nately, the correct values of input variables suchas GNP or interest rates for any future year arethemselves unknown, and uncertainty is simplytransferred from the behavior of the aviation in-dustry to behavior of the economy at large.

Models tend to assume that the future will bevery much like the past. If the real world situa-tion changes substantially, the model is corre-spondingly less accurate. Such changes might in-clude sudden economic perturbations, such as thefuel crisis of 1973, or longer term restructuringof the market or the economy. For example, avia-tion models constructed to predict the behaviorof a regulated industry with stable fares and routestend to be less accurate now that price competi-tion and freer entry into new markets are per-mitted. Further, because models are, at best, onlypartial representations of the world, it is not easyto predict which changes in travel behavior or eco-nomic conditions will be important in the futureor how they should be incorporated in a model.A major problem among forecasters is discrimi-nating among relationships that will persist andthose that will not.

From this, it is clear that aviation demandmodels are highly influenced by underlying as-sumptions about economic and social trends andfuture conditions. The model itself may accuratelydepict relationships between air transportationand the state of the economy or the structure ofthe aviation industry, but if the assumed statesof these variables at some future time are too op-timistic, too pessimistic, or simply inconsistentwith the course of events, the resulting forecastscan go far astray. It is probably fair to concludethat, even with the present limitations of themodel builder’s art, the inaccuracies due to the

structure of forecasting models are generallysmaller than those induced by erroneous inputassumptions. An aviation demand model is nomore robust than the assumptions on which itrests, and assumptions (usually a matter of ex-pert judgment) are the most fragile part of theprocess.

The limitations, biases, and characteristics ofa forecast may depend as much on who is doingthe forecast as on the particular method beingused. Airport authorities, aviation agencies, air-lines, and industry associations all make forecaststo help them plan for the future and to help themjustify plans and programs. There is, in manycases, a natural inclination to err on the side ofoptimism in order to protect the future interestsof the agency producing the forecast. Thus, localairport authorities planning an expansion projectmay tend toward an unduly high appraisal of theoverall growth prospects in the local economyand, hence, future passenger and cargo traffic. Asa consequence, basing decisions to construct orexpand facilities on these forecasts may lead toexcess capacity or premature investment of capi-tal. However, this may be less detrimental thanrelying on a forecast which is too low. Slight over-capacity and anticipation of demand is viewed bymost airport planners as preferable to congestion,delay, and perhaps deterioration of service andsafety.

Local forecasting may not take into accountbroader regional trends and conditions. The cur-rent shifts in population and economic activity

Photo credit: Federal Express

Air cargo hub

25-420 0 - 84 - 12

168 ● Airport System Development

from the “Frost Belt” to the “Sun Belt” area casein point. States in the South and West are expectedto experience much greater growth in aviationactivity in the next few decades while communi-ties in the North and East will tend to decline.However, this trend—with its consequences forairport planning and development—is not yet gen-erally recognized in the forecasts prepared by“Frost Belt” communities, perhaps because theyare unwilling (or find it politically unwise) to goon public record as predicting their own decline.

The tendency of the aviation community toorganize categorically—air carriers, commuters,general aviation, helicopters, etc.—also influencesaviation demand forecasting, both the forecastsprepared by such groups themselves and thoseprepared by others who seek to anticipate thedemands that each sector will place on the air-port and air traffic control system. All of thesegroups compete in some measure for the scarceresources of airspace and airport facilities, andnone is prepared to concede that its own require-ments are less pressing than those of others or toadmit any scenario other than continued growth.As a result, each sector tends to publicize its ownaspirations lest it lose out in the general competi-tion and find its access foreclosed. With sufficientrepetition and vigorous advocacy, such declara-tions become accepted as the reality of futuredemand.

For example, the President of the National Busi-ness Aircraft Association, Inc., asserted in mid-1982 that “a great pent up demand for aircraft isbuilding all the while the recession continues.Once the general economic climate begins to im-prove and the price of borrowing money declineseven modestly on a long-term basis, we willwitness marketplace activity on a scale neverbefore known.”s While this bold prediction maybe arguable, it reflects a natural defensive strat-egy. If the forecast turns out to be true, generalaviation, especially business aviation, will soonbecome the majority user of the airport and ATC

system. In this event, business aircraft operatorswould be unwise to allow air carriers to preemptlanding slots or to accept restriction or diversionof their activities to accommodate air carriers. Onthe other hand, if the forecast proves too op-timistic, decisions based on it could result in seri-ous overcapacity or misallocation of resources.

No forecast is any better than its input data,and a little foreseen consequence of deregulationis that forecasting may become more difficult andless accurate in the future because of the lack ofa detailed and adequately maintained data base.The Airline Deregulation Act of 1978 calls for agradual phaseout of the Civil Aeronautics Board(CAB) by 1985. At that time, all functions of theCAB will either be eliminated or transferred toother agencies. It is still not clear how much ofCAB’s extensive data collecting activities will betransferred and continued. Since nearly everyonein the aviation community makes use of CAB datafor forecasting purposes, the prospective loss ofthis resource is now the focus of extreme concernin industry and government. Not all parties agreeon which parts of the CAB data base should bemaintained and who should be responsible, butthere is apparent consensus on at least four ma-jor points:

●

●

●

●

CAB data have become a crucial part of theaviation forecasting process.Continued collection of at least the basic dataon air carrier and commuter operations isvital to intelligent analysis, interpretation,and forecasting of regional and local avia-tion demand.Without such data, the reliability of forecast-ing for air carrier and commuter activitycould decline, perhaps to a level no betterthan current general aviation forecasting.Forecasting aviation demand could becomemuch more difficult after 1985.

The prospective loss or drastic reduction of thewidely used and respected CAB data base loomsas only the latest example of an unexpected ma-jor event in the uncertain world of aviation de-mand forecasting.

Ch. 8—Forecasting and Trends 169

RECENT TRENDS IN THE AIRLINE INDUSTRY6

Of all the forces acting on civil aviation at thepresent time, that which has the most profoundeffect—and which is perhaps the least understoodin all its ramifications—is the recent deregulationof the airline industry. For 40 years, from 1938to 1978, CAB exercised broad powers over theairline industry, controlling entry and exit of car-riers, markets served, and fare structures. Al-though this was a period of great growth in theairline industry, the pace of change in patternsof service and airline route structure was slow be-cause it was tempered by the regulatory process.CAB proceedings on route awards or fare changestook months or years to complete. The CAB ofteninterpreted “public convenience and necessity” inlight of the need to maintain financial stabilityamong existing carriers. Although CAB progres-sively increased the level of competition, this proc-ess was usually accomplished by extending theoverlap of routes and services among existingcarriers.

The Airline Deregulation Act set a timetable forphasing out CAB statutory authority over a 4-yearperiod. The major provisions of the act, effectiveimmediately, relaxed CAB authority over routes andfares and made it easier for carriers to enter newmarkets or to reactivate dormant routes. Except inlocalities qualifying for essential air service, airlinesbecame free to terminate service to a communityby means of a simplified notice procedure. In addi-tion, carriers were allowed to change fares withina broad “zone of reasonableness” determined by air-line costs. Deregulation thus set the stage for a widevariety of changes in the way air services are offered.

While some of the effects of deregulation arenow apparent, the full impact of these regulatorychanges on the market cannot yet be evaluated.Air carriers have been operating in a deregulatedenvironment for only a little over 5 years, andthey are still in a “shake-down” period of adjustingto new freedoms and competitive pressures. Atthe same time, other major factors—escalatingfuel prices, the recession, and the Professional AirTraffic Controllers Organization (PATCO) strike–

bThis section is based in part on a report prepared for OTA bySimat, Helliesen & Eichner.

have had their own effects on the airline indus-try, thus distorting the view of what deregulationhas actually produced.

In general, the period 1978-81 marked a sharpincrease in all airline costs, but no other costescalated as much as fuel, which rose from $0.39per gallon in 1978 to $1.04 in 1981. Fare flexibilityprovided by deregulation enabled some carriersto blunt the effects of increased fuel costs byquickly passing on the resulting higher costs toconsumers. However, the deep recession, begin-ning with the first quarter of 1980, compoundedthe problem as the industry was caught in theposition of needing to raise fares at a time of gen-eral economic decline.

The full effects of airline deregulation weremuted if not altered by the recession, which beganabout 15 months after deregulation and has con-tinued to disturb the U.S. economy. The reces-sion has had a major effect on the airline indus-try, whose health has always been closely linkedto GNP. In the period 1976-78, before the reces-sion, real GNP increased by 6.7 percent per an-num. During the period immediately followingderegulation, GNP grew at less than 1 percent and

Photo credit: Federal Aviation Administration

Controller’s view of a hub

170 Airport System Development

actually declined during 1982. The overall eco-nomic performance of the airlines showed a cor-responding slump, although some airlines faredbetter than others and a few even managed to in-crease their profitability.

Some analysts argue that service and fare stim-ulation following deregulation, combined with theability to drop unprofitable routes, cushioned theeffects of the recession on the air carriers. Highinterest rates and poor business conditions clearlyblocked the start of several new carriers and in-directly provided a measure of protection for ex-isting carriers.

In effect, the air traffic controllers’ strike inAugust 1981 reintroduced regulatory limits on theindustry. The strike led FAA to close 58 ATCtowers at small airports and to impose a cap onoperations at the 22 busiest airports. To allocatethe hardship equitably, FAA required each air-line to reduce operations proportionately at those22 airports. An airline could exercise full latitudeto select routes, so long as it had operating rights(slots) at the capped airports. Slots could be tradedand, for a limited time, even sold. But if an air-line did not use a slot, it was forfeited. Thesestrike-related restrictions have since been lifted,but their effects linger. Because operating rightshad considerable value in a depressed, strike-ridden market, FAA restrictions forced many car-riers to hold on to slots and postpone or cancelplanned route changes. Equally important, the capon operations limited opportunities for new car-riers to enter many of the major markets.

In many respects, the strike slowed the proc-ess of deregulation, but it also stimulated forma-tion of new hub-and-spoke patterns of operationas air carriers sought to increase the number ofpassengers handled by using larger aircraft at theconstrained airports or by transferring operationsto new regional hubs at less crowded airports.

The ultimate outcome of deregulation is notyet clear. The effects apparent so far—althoughblurred by the impacts of increased airline costs,the recession, and the air traffic controllers’ strike—suggest that profound changes are taking placein the structure and economics of the airline in-dustry, with repercussions that may persist forseveral years.

Changes in Airline Industry Composition

Since deregulation, the number of airlines hold-ing CAB operating certificates has increased ten-fold. At the end of 1978, there were only 36certificated carriers; now there are 355. To accom-modate these changes, CAB has devised a newclassification system that categorizes airlines asmajor carriers, national carriers, and large ormedium regional carriers on the basis of theiroperating revenue. This system is not wholly com-patible with two-way classification of trunk andlocal service carrier in use before 1978. (Table 40compares the new and old classification systems. )For purposes of this discussion, it is more con-venient to use the pre-1978 categories, augmen-ted by two additional groups (startup jet carriersand commuter airlines) in order to show thechanges that have taken place in air carrier routesand services since deregulation.

Before deregulation, the 10 trunk carriers dom-inated major domestic U.S. air service markets.Even today, these airlines account for about 60percent of total domestic enplanements and aneven greater proportion of revenue passenger-miles, revenue, and fleet capacity. The trunk air-lines operate large fleets of jet aircraft, of whichnearly 20 percent are widebody. Trunk carriersare equipped to serve primarily the long-haul mar-kets, emphasizing direct service between most ma-jor domestic markets.

Six local service airlines operate short-haul jetservice in domestic markets. In 1982, these car-riers enplaned 19 percent of all domestic air pas-sengers. Through expansion and mergers, localshave grown substantially in size and now threeof these—USAir, Republic, and Frontier—arelarger than some trunk carriers. Still, there aresubstantial differences between local service andtrunk carriers. Local service carriers operate pre-dominantly narrowbody jet aircraft, typicallywith 100 to 125 seats. The average stage lengthand passenger trip length for local service airlinesis less than half that of trunk carriers.

The “startup jet carriers” include former in-trastate carriers that have expanded to nationwideservice since deregulation, as well as new firmsthat began operation since 1978. Previously, therewere four intrastate carriers that provided short-

Ch. 8—Forecasting and Trends 171

Table 40.—Domestic Airlines by Class of Carrier

M u s e -

N e w Y o r k A i r

A i r M i d w e s t

Air I l l inois

A i r W i s c o n s i n

P e o p l e E x p r e s s

Medium regionaisAspenCascadeEmpire

(sampie):

Golden WestMississippi ValleyWright

Charter carriers (sample):CapitolWorld

MidwayMuseNew York AirPacific SouthwestSouthwestPeople Express

Commuters (sampie):Air Midwestb

Aspenb

Wright b

EmpireAir “IllinoisAir Wisconsinb

Golden WestMississippi Valley

%Iassifications are based on carriers’ annual operating revenues.bceflificated before deregulation.

SOURCE: Federal Aviation Administration.

haul jet services entirely within the boundaries ofCalifornia, Texas, or Florida. After deregulation,these airlines obtained CAB certification and nowfly interstate routes. Even though they have ex-panded their operations to new out-of-State mar-kets, they retain certain pre-1978 characteristicsin that they continue to serve highly competitiveshort-haul markets with emphasis on frequencyof flights and low fares.

Several other new jet airlines have begun oper-ation since deregulation. Some—e. g., New YorkAir, Midway, People Express, and Muse—are

new ventures. One—Empire Airlines—is a formercommuter airline that has successfully introducedjet service. Capitol Air and World Airlines areformer charter operations that have inauguratedscheduled service. Typically, the startup carriersserve high-density, long-haul markets where theycompete with trunk carriers, principally on thebasis of low fares.

Commuter airlines usually do not operate jets,but propellor-driven aircraft with up to 30 seats.Before 1978, most commuter airlines were exemptfrom CAB fare and route regulation, but they

172 . Airport System Development

were restricted to the use of aircraft no larger than30 seats. A few—e.g., Air Midwest, Air NewEngland, and Wright-obtained CAB certificationin order to use larger aircraft or to receive sub-sidies for air service to small communities. Aslocal service and trunk carriers have withdrawnfrom smaller markets, commuters have moved into fill the gap. One of the earliest and most suc-cessful examples is Allegheny Airlines (now USAir),which transferred certain of its services to 12smaller independent airlines (known collectively

under the name “Allegheny Commuter”) thatoperate under contract to USAir.

Since 1978, over 300 commuters have obtainedCAB certification. They are becoming progres-sively integrated into the national air transpor-tation system, providing local point-to-point serv-ice and linking small communities with the largerairport hubs. Passenger enplanements on com-muters have grown rapidly, from 4.2 percent ofpassenger enplanements in 1979 to 6.3 percent in1983. 7

Changes in Route Networks

Airline deregulation has changed the nationalair service network from a stable system of routesserved by established carriers to a fluid market-place where carriers frequently adjust routes, levelof service, and fares. The older airlines have aban-doned some markets and begun service to others.New entrants have taken over some of these aban-doned routes and established themselves in thedense markets where they see a competitive op-portunity.

The course of the industry since deregulationhas been one of uneven expansion and contrac-tion. The principal effect on airports is that sud-den and less predictable changes have taken placein the air carriers serving the airport, the level ofservice provided, and the facilities needed to ac-commodate them. Some communities have ex-perienced a general improvement in air servicesince deregulation, but not all have benefited froman unregulated environment, and some have suf-fered almost complete loss of air service.

‘FAA Aviation Forecasts, Fiscal Years 1984-1995 (Washington,DC: Federal Aviation Administration, FAA-APO-84-1, February1984).

Table 41 shows changes in points served by asample of carriers between 1978 and 1981; table42 shows the changes in service by size of city.The designations large, medium, small, and non-hub are FAA and CAB classifications based onnumber of passengers enplaned. Large hubs arethe top 24 cities, medium hubs the next 39. Thereare 61 small hubs and 461 nonhubs. s

Most of the established carriers added anddeleted service points frequently during this period.Air California and Air Florida, no longer re-stricted to intrastate traffic, expanded the num-ber of points served. The Allegheny Commutersystem of USAir abandoned 23 stations and added30. American Airlines moved into Braniff’s mar-ket, adding 12 stations in the Texas, Louisiana,and Alabama markets. Frontier Airlines discon-tinued service to 28 nonhubs and small hubs andbranched out to other small cities and a few largehubs. Piedmont pursued the same strategy, ad-ding seven large cities and two high growth areasin Florida, while deleting 16 small hubs andnonhubs.

Competition has been intense in certain highgrowth markets. For example, cities like Phoenixwith substantial population growth have attractednew carriers. Traffic growth at Orlando, whichis now served by 10 carriers as opposed to 4 beforederegulation, is a product of both economic de-velopment (Disney World and Epcot) and a surgeof discretionary travel stimulated by lower fares.

For the most part, trunks and local service car-riers dropped short-haul markets. Between 1978and 1981, the number of trunk airline flights tomarkets with stage lengths under 200 miles droppedby 44 percent. Local carriers followed suit by re-ducing short-haul departures by 35 percent andmore than doubling flights in the range of 500 to1,000 miles. Some of the short-haul market hasbeen picked up by the commuter carriers.

The emerging pattern is one of increased activ-ity at large and medium airports and eroding serv-ice at the smallest nonhub airports, as shown intable 43. Confirmation of this pattern can befound in data on changes in aircraft departures

8FAA Statistical Handbook of Aviation, Calendar Year 1982(Washington, DC: Federal Aviation Administration, December1982).

Ch. 8–Forecasting and Trends ● 173

Table 41.—Changes in Stations Served by Air Carriers, 1978-81

Stations served in: Stations

Carrier 1978 1981 Added Deleted

Air California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Air Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Allegheny Commuter.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .American Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Braniff Airways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capitol International Airways. . . . . . . . . . . . . . . . . . . . . . .Continental Airlines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Delta Air Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Eastern Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Frontier Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Jet America Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Midway Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Muse Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .New York Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Northwest Airlines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ozark Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Pacific Southwest Airlines . . . . . . . . . . . . . . . . . . . . . . . . .Pan American . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .People Express Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . .Piedmont Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Republic Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Republic Airlines West . . . . . . . . . . . . . . . . . . . . . . . . . . . .Southwest Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Texas International Airlines . . . . . . . . . . . . . . . . . . . . . . . .Trans World Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

United Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .USAir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Western Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .World Airways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1011494537

030716687

0000

31

471334

048

11446

93437

835431

0

1418566134

446717078

212

21336

4815211040

10437143250

775827

5

79

3024

5

417101519

212

2135

1152

109

1545

1217

101655

32

2388

01

101128

00000

103

150

17

2513

014

4

1612

90

174 ● Airport System Development

Table 43.—Aircraft Departures by Hub Size (June 1, 1978, and June 1, 1982)

Number of Departures per weekb

Increase PercentHub sizea communities June 1978 June 1982 or decrease change

Departures by hub size:Large. . . . . . . . . . . . . . . . . . . . . . 1923 60,384 63,825 3,441 5.7Medium . . . . . . . . . . . . . . . . . . . 36 23,076 25,480 2,404 10.4Small. . . . . . . . . . . . . . . . . . . . . . 66 13,788 14,115 327Nonhub. . . . . . . . . . . . . . . . . . . . 504 28,575 25,239 (3,336) (1::;)

Total . . . . . . . . . . . . . . . . . . . . 629 125,823 128,659 2,836 2.3

Distribution of departure changes by hub size:Number of hubs

Change Large Medium Small Nonhub Total

Increase . . . . . . . . . . . . . . . . . . . 18 23 30 200 271No change . . . . . . . . . . . . . . . . . 0 0 1 12 13Decrease . . . . . . . . . . . . . . . . . . 5 13 35 292 345

for all commercial service airports, shown in table44. According to CAB, over 292 nonhub cities lostservice from 1978 to 1982.9 In some instances,localities dropped by larger carriers have receivedreplacement service from commuter airlines. Asa result, the average size of aircraft serving thesepoints is smaller, and the number of seats avail-able per departure has declined.

Medium hubs appear to be the main benefici-aries of increased air carrier activity. Two factorsappear to account for this trend: the air trafficcontrollers’ strike, which limited access to manylarge airports, and the growth of regional hubbing.As shown in table 45, departures from mediumhubs to other medium hubs increased by 30 per-cent between 1978 and 1982. Departures frommedium hubs to small or large hubs have also in-creased. By contrast, flights between large hubshave declined.

Formation of New Hubs

Air traffic has increased at airports in severalmedium-size cities as a result of moves by trunkairlines and local service carriers to consolidatetheir operations in hub-and-spoke route systems.(A diagram of a typical hub-and-spoke structureis shown in fig. 19. ) The basic strategy is to estab-

lish one airport as the hub into which traffic fromother cities is fed along radial routes. Flights bya carrier into and out of the hub are closely sched-uled in “complexes” or “connecting blocks” of ap-proximately 30 to 45 minutes so as to facilitatetransfers and minimize passengers’ waiting time.For the air carrier, the chief advantage is that serv-ice can be provided between smaller cities andalong thinly traveled routes more economicallythan if they were connected by direct flights.

Hubbing is not new. Delta established a hubat Atlanta long before deregulation, and hubbinghas been the core of Delta’s operating and mar-keting philosophy for years. The same principleof tight control of traffic feed through a singlepoint was applied over 20 years ago by Unitedin Chicago and USAir in Pittsburgh.

Deregulation, however, has added impetus tothe practice of hubbing by allowing airlines almostcomplete freedom to set up new routes and serv-ice points. Many local carriers, no longer satisfiedto feed traffic to the trunk carriers, have takenthe opportunity to establish their own regionalhubs—e.g., Piedmont at Charlotte, Dayton and,most recently, Baltimore; Republic at Memphis;and Western at Salt Lake City.

By setting up a hub at an underutilized airport(usually in a medium-size city), a carrier can avoidthe congestion encountered at major airports andreduce operating costs, while at the same time cre-ating markets in surrounding cities where it might

Ch. 8—Forecasting and Trends ● 175

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176 “ Airport System Development

Table 45.—Changes in Weekly DeparturesBetween Major Categories of Airports

Percent changeItem (June 1978 to June 1982)

Between large hubs and:Large hubs . . . . . . . . . . . . . . . . . . . . . . (11.5)

Between medium hubs and:Large hubs . . . . . . . . . . . . . . . . . . . . . . 6.5Medium hubs . . . . . . . . . . . . . . . . . . . . 30.4

Between small hubs and:Large hubs . . . . . . . . . . . . . . . . . . . . . . (5.8)Medium hubs . . . . . . . . . . . . . . . . . . . . 11.2Small hubs . . . . . . . . . . . . . . . . . . . . . . (12.0)

Between nonhubs and:Large hubs . . . . . . . . . . . . . . . . . . . . . . (9.4)Medium hubs.. . . . . . . . . . . . . . . . . . . (12.1)Small hubs . . . . . . . . . . . . . . . . . . . . . . (25.5)Nonhubs . . . . . . . . . . . . . . . . . . . . . . . . (28.4)

not otherwise be practical to offer frequent airservice, or any service at all. Further, by choos-ing an airport that is not extensively served bycompeting carriers, the hubbing carrier maintainscontrol over traffic; passengers who arrive on thecarrier’s flights will depart on one of its connect-ing flights, not on a competitor’s.l0 In general, car-riers setting up new regional hubs have concen-trated on serving the traveler flying less than 1,000miles, a group which may represent as much astwo-thirds of the domestic market.

Hub-and-spoke operations seem to be increas-ing even at large airports, such as Chicago, At-lanta, Denver, and St. Louis. Since deregulation,most of the trunk carriers have increased the num-ber of markets served nonstop from large hubs.Ninety-nine percent of Continental’s departures(before the airline filed for bankruptcy) fed theHouston and Denver hubs. In 1979, Delta oper-ated nonstop flights from Atlanta to 59 cities;today it is serving 72, having added routes to theCaribbean as well as stations in the West andSouth. United’s schedule shows a net gain of 16points served nonstop from its Denver hub. In1981, TWA dropped direct service from its St.Louis hub to Atlanta, Toledo, and Knoxville but

added direct service to Des Moines, Houston, Lit-tle Rock, San Diego, San Antonio, and Chicago.However, some observers believe that this typeof route experimentation and readjustment maynot signal a long-term trend. They expect that,as air traffic increases generally, the disadvantagesof hub-and-spoke operation at the largest airportswill outweigh the advantages, and some air car-riers will divert their activity to medium hubs.

Air cargo carriers are also turning to hubbing.In 1972, Federal Express adopted the hub-and-spoke strategy for fast delivery of air cargo under70 pounds. The site selected, Memphis, is centrallylocated with a modern airport that is relativelyuncrowded and practically never shut down byweather. Between 11:00 p.m. and 4:00 a.m. eachday, Federal Express flights converge on Memphisfrom all over the country, unloading as many as80,000 packages, which are sorted and reloadedon flights to destination cities within a 4-hourperiod.

Other cargo carriers have likewise adopted thehubbing concept, especially for the overnight de-livery and small package segments of their busi-ness. For example, Flying Tigers has converted itsChicago storage facility into an overnight sortingcenter. Emery Air Freight, a large freight for-warder that now operates an aircraft fleet, hasbuilt an overnight sorting center in Dayton.

Selection as the site of a new hub can be a boonto the local airport in terms of growth in trafficand revenue. For example, since Piedmont estab-lished a hub at Charlotte, the increased traffic vol-ume has made it possible for the airport manage-ment to reduce landing fees for all airport usersand still enjoy higher revenues. Other aspects ofairport operation at Charlotte have benefited aswell. Income from parking and concessions is now20 percent ahead of forecasts, and the airport hasrecently built a new 10,000-ft runway and a $64million terminal. Similarly, Piedmont’s Midwest-ern hub in Dayton appears to be revitalizing anairport which had lost service after deregulation.

Western Airlines embarked on development ofa major hub in Salt Lake City in direct competi-tion with carriers serving regional and transcon-tinental markets through Denver and Dallas/FortWorth. Western currently offers nonstop service

Ch. 8—Forecasting and Trends ● 177

‘ .

/

= 0u)

//

/ /\

.

178 Airport System Development

to 33 cities, with approximately 86 flights perweekday. Largely as a result of Western’s hub-bing, traffic through Salt Lake City has increaseddramatically. Domestic enplanements are up 13percent from 1981, and departures have increasedby 25 percent. Salt Lake City Airport has re-.sponded by raising $30 million in bonds to ex-pand the terminal and to build Western a neweight-gate concourse.

On the other hand, becoming a new hub mayprove a mixed blessing for an airport. The pat-tern of operations associated with hubbing—many closely spaced arrivals and departures—means that the airport is extremely busy for briefperiods but practically idle the rest of the time.This peaking effect is illustrated in figure 20,which is a partial listing of Western Airlines’ ar-rivals and departures at Salt Lake City. In fact,peaking is even more severe than the figure showssince there are other airlines that rely on connec-tions with Western or that operate flights at thesame time as one of Western’s connecting banks.These extreme traffic surges strain airport capac-ity and may create the need for construction ofadditional facilities that are needed for only asmall part of the day.

Where the hubbing carrier dominates airportuse, the airport management may find itself at themercy of that carrier’s operating and expansionplans. For example, while Piedmont’s establish-ment of a hub at Dayton has led to a doublingof air carrier operations there, it also made theairport management dependent on one carrier forhalf its revenues. Construction of new facilities,needed solely to accommodate the highly peakedpattern of service of a single carrier, increases thatdependency and leaves the airport operator opento great financial risk should the carrier decideto move elsewhere.

Other adjustments may lie ahead for airportsthat serve as national or regional hubs. It is notyet known if there are minimum requirements fora hub to operate successfully or whether the oper-ation of several hubs in the same region will leadto an oversupply of air services in certain mar-kets. The pattern of hubbing will probably en-dure, but the fluidity of a deregulated market,especially one that continues to be distorted by

the recession and the lingering effects of the airtraffic controllers’ strike, makes the future diffi-cult to predict.

Aircraft Equipment

The key to economic efficiency for an aircraftis operation on a route to which it is well suitedin terms of size, range, and performance charac-teristics. Air carriers strive to use their equipmentin this way; but because aircraft are expensive andlong-lived investments, available equipment can-not always be matched to routes and traffic vol-ume as well as one would like. It is especially dif-ficult now, when service patterns and markets arein flux. The efficiencies attainable through the useof larger aircraft may not be available if theeconomics of hub-and-spoke operation and in-creased competition among carriers argue for theuse of smaller aircraft. As carriers begin to replacetheir present fleets with aircraft that are bettersuited to current market conditions, aircraft sizebecomes an important factor in assessing futureairport capacity needs.

The aircraft that now make up the U.S. jet fleetare of three major types. Narrowbody short- andmedium-range aircraft, like the DC-9, B-727, andB-737, constitute about 75 percent of the fleet.These aircraft, which seat 100 to 150 passengers,are used primarily for flights with stage lengthsunder 1,000 miles or those with several inter-mediate stops. Medium- and long-range widebodyaircraft such as the DC-10, L-1011, or B-747 makeup about 18 percent of the jet fleet. These aircraft,seating 250 to 400 passengers, are most efficientlyoperated on heavily traveled long routes of morethan 1,500 miles, but they can be (and have been)used effectively on shorter routes of sufficientlyhigh density. Long-range narrowbody aircraft likethe DC-8 and B-707, with 140 to 180 seats, makeup only about 7 percent of the fleet and are usu-ally operated on routes over 1,500 miles whichare not densely traveled enough to warrant useof a widebody (see fig. 21 and table 46).

The short- and medium-range aircraft whichmake up three-quarters of the fleet vary widelyin age (see fig. 22). About 60 percent are over 10years old, and 40 percent are over 15 years old.Many will be replaced in the next few years,

Ch.

8—F

orecasting and

Trends

“ 179

;

Figure 20.-Western Airlines Activity at Sal' Lake City npe_t __ ... per ....... -

"n1¥aI. rtAptrtu ....

'lin 1!i 10 ::)

0100

0200

0300

0400

0500

0600

" 0700

0800

0900

1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000

~200 ~

2300 r~ 2400

SOURCE: Western Airlines

180 . Airport System Development

Figure 21.–Composition of U.S. Commercial Jet Fleet, 1982

Medium/long rangenarrowbodv

7.OVO -

Short/medium range narrowbody aircraft:B-727 . . . . . . . . . . . . . . . . . . . . . . . . . 1,012B-737 . . . . . . . . . . . . . . . . . . . . . . . . . 238BAC-111 . . . . . . . . . . . . . . . . . . . . . . 26DC-9 . . . . . . . . . . . . . . . . . . . . . . . . . 473

1,749

Medium/long range widebody aircraft:A-300 . . . . . . . . . . . . . . . . . . . . . . . . . . 25B-747 . . . . . . . . . . . . . . . . . . . . . . . . . .128DC-10 . . . . . . . . . . . . . . . . . . . . . . . . . . 159L1011 . . . . . . . . . . . . . . . . . . . . . . . . . . ~

429Medium/long range narrowbody aircraft:6-707 . . . . . . . . . . . . . . . . . . . . . . . . ...71DC-8 . . . . . . . . . . . . . . . . . . . 90

161

Ch. 8—Forecasting and Trends . 181

Figure 22.—Age of Aircraft in Service in U.S.

600~

Commercial Jet Fleet (different scales)

Short/medium range

160F

80

60

40

2C

o

Long-range widebody

Long-range narrowbody

Before1963 1965-67 1968-70 1971-73 1974-76 1977-79 1980-82

Year placed in serviceSOURCE: Commercial Aircraft Fleet Databank, Lockheed-Georgia Co., July 1982.

182 Airport System Development

Table 46.—Present and Future Commercial Jet Aircraft

Current generation Next Generation

Manufacturer Designation Seats a Manufacturer Designation Seats a

Short/medium-range narrowbodyBoeing B-727-1OOBoeing B-727-200Boeing B-737-200Fokker F-28McDonnell Douglas DC-9-1OMcDonnell Douglas DC-9-30McDonnell Douglas DC-9-50

Medium/long-range widebodyAribus industrie A-300Boeing B-747-1OOBoeing B-747-200Lockheed L-101 1McDonnell Douglas DC-10-IOMcDonnell Douglas DC-10-4O

Medium/longwange narrowbodyBoeing B-707-120Boeing B-707-320McDonnell Doualas DC-8-62

70-131120-175115-13065-85

90115139

220-300374-452374-500256-400250-380250-380

125120-189

189

Airbus IndustrieBoeingBoeingBritish AerospaceFokkerMcDonnell Douglas

Airbus IndustrieBoeingBoeingBoeing

A-320B-737-300B-757BAE-146-200P-332MD-80

A-31OB-747-300B-767-200B-767-300

150132-148186-22082-109110167

205-265530

210-255270

largely with aircraft like the B-757 (195 seats), DC-9-80 (155 seats), and the B-737-300 (140 seats)—all of which are bigger than equivalent models incommon use today (see table 46). Although somemanufacturers are considering production of newshort- and medium-range aircraft with about 100seats, they are generally viewed as replacementsfor aircraft of yet smaller size, like the DC-9-1O.

A somewhat opposite trend is expected in thelong-haul segment of the fleet. The long-rangenarrowbody jets are 13 to 20 years old. They aretechnologically obsolete, fuel-inefficient, andnoisy by present FAA standards. Most will beretired from service within the next 5 years, al-though it is possible that some could be refittedwith new engines to extend their economic lifetimea bit longer. There is no new narrowbody aircraftin design or production which is an exact equiv-alent. Instead they will be replaced either with cur-rent generation widebodies or new models like theB-767 or the A-31O.

Most long-range widebody aircraft now in thefleet are expected to remain in service for severalmore years, but they too will eventually be re-placed. Except for a stretched version of the B-747, which Boeing expects to produce for use onheavily traveled long-haul routes, most new wide-

bodies for domestic use will be smaller than ex-isting models. Aircraft such as the B-767 and A-310, which seat between 230 and 270, are typicalof this new generation of long-range aircraft.

Overall, the average size of the jet fleet mayremain about the same, or perhaps decrease slightly,but there will be a greater range of sizes. Today’sfleet averages 150 seats within a range of 85 to400; the future fleet might be as much as 10 per-cent smaller and made up mostly of aircraft inthe 100- to 250-seat range, but with some muchlarger aircraft with 500 seats (or even 700 to 800seats for a full upper deck 747) operating on denseroutes.

To the extent that the demand for air travel in-creases over the coming years, airports will clearlybear an additional burden. However, this burdenmay not be as onerous as it would first appear.For example, the average load factor in commer-cial aviation has been rising over the past 5 yearsin response to higher operating cost and lowerfares. To the extent that the average load factorcontinues to increase in the future, fewer aircraftoperations will be needed to handle a given num-ber of passengers. Or, viewed another way, thegrowth of aircraft operations will not be as rapidas the growth in passenger enplanements. If, how-

Ch. 8—Forecasting and Trends 183

ever, the number of competitors increases in cer-tain high-density markets, the average number ofpassengers attracted by each competitor will therebybe reduced. In this case, the total number of flightoperations would be likely to increase as carriersfavored smaller aircraft and placed emphasis onfrequency of service and price competition.

The next generation of short- and medium-range aircraft—workhorses of the current jetfleet—are likely to have an additional 20 to 30seats per aircraft. This should translate into a re-duction of 20 percent or so in the number of oper-ations needed to carry a given volume of passen-gers. On the other hand, the average size ofaircraft on long-haul routes will probably decreaseover the next decade as more carriers competefor the market. While this might lead to an in-crease in the number of operations, there is rea-son to believe that reduction in aircraft size couldalso augur a change in the structure of airlinenetworks.

The present generation of widebodies provedeconomical only in service between major hubs.Many passengers had to be routed through thesehubs in order to take advantage of the attractive

Figure 23.—Composition of

economics afforded by widebodies. Bringing thesepeople into and out of large hubs often createdadditional and unnecessary aircraft operationsthat contributed to the delay and congestion atthese airports. If airlines choose to utilize the newgeneration of smaller (but economical) long-rangeaircraft to provide direct service in lower volumemarkets or in connecting flights to smaller hubs,the burden of increased passenger enplanementswill be shifted away from presently congested ma-jor hubs.

The aircraft used by commuter carriers arealmost entirely propellor-driven, with either pis-ton or turbine engines. Although they range insize from 6 to 60 seats, over 80 percent seat 19

or fewer passengers (fig. 23). Federal regulations—which limited the size of commuter aircraft to amaximum of 19 seats before 1972, 30 seats in 1972,and 60 seats since 1978—dampened the interestof U.S. manufacturers in building small transportaircraft.11 Consequently, few U.S. firms now pro-

Commuter Aircraft Fleet, 1981a

All single engine

Mul t iengine (seat ing capaci ty )

1-9

10-20

21-30

>31

Otherb

Percent

P 13.3

37.0

32.1

7.4

7.9

❑ Piston powered

Turbine powered

Other2.3

aPassenger aircraft onlybHellcopter and let.

SOURCE: Regional Airlines Association Annual Survey, 1981.

25-420 0 - 84 - 13

184 ● Airport System Development

duce small transport aircraft, most of which areimported from Canada, Brazil, and the Nether-lands. With the progressive lifting of restrictionson the size of aircraft that commuters may oper-ate, the average size of aircraft in the commuterfleet has increased from about 10 seats in 1970to about 15 in 1980. This growth trend is likelyto continue, and many of the new commuter air-craft entering the fleet over the next decade willbe in the 30- to 60-seat range.

The growth of commuter airlines will have im-portant implications for future airport needs. Thecommuter airline fleet tripled between 1970 and1981, with much of the growth occurring sincederegulation (table 47). FAA forecasts that by2000 the commuter fleet will triple again, reachingabout 4,500 aircraft .12 While many of these willbe used in air service to small communities, wheremajor air carriers do not find it profitable to oper-ate, a large number will also converge at hub air-ports to feed passengers to larger carriers. Manyof these operations will be at busy airports whereit will be hardest to accommodate them at gatesand in terminal facilities. Further, the mixing of

12 National Airspace System Plan (Washington, DC: Federal Avia-tion Administration, April 1983, revised edition), p. II-2.

Table 47.—Aircraft Operated by Commuter andRegional Airlines, 1970-81

Aircraft PercentYeara in service annual change

1970 . . . . . . . . . . . . . .1971 . . . . . . . . . . . . . .1972 . . . . . . . . . . . . . .1973 . . . . . . . . . . . . . .1974 . . . . . . . . . . . . . .1975 . . . . . . . . . . . . . .1976 . . . . . . . . . . . . . .1977 . . . . . . . . . . . . . .1978 . . . . . . . . . . . . . .1979 (est) . . . . . . . . . .1980b . . . . . . . . . . . . . .1981b . . . . . . . . . . . . . .

687782791885997

1,0731,0091,1191,2001,3501,6061,743

141

12138

– 611

712198

large jet and small propellor-driven aircraft in thesame traffic stream will add a burden to air traf-fic control and could aggravate congestion anddelay both in the airspace and on the airport sur-face. A partially offsetting factor is that the aver-age size of commuter aircraft will probably in-crease. Thus, while commuter operations willgrow, they will not be as great as they would beif aircraft size were still restricted by a regulatoryceiling of 19 or 30 seats.

IMPLICATIONS FOR AIRPORT DEVELOPMENT

There is almost universal agreement that airtraffic will continue to increase throughout the restof this century and that some forms of growthcould lead to serious congestion and delay in thenational airport system. There is considerably lessagreement about how much traffic will grow andhow it will be distributed across airports andamong sectors of civil aviation. Of the two ques-tions, distribution is probably the more impor-tant, since it will determine which airports are af-fected and what measures can be taken to dealwith the congestion and delay that could result.If, for example, traffic continues to concentrateat airports that are already severely congested orat those now approaching capacity limits, thereis a legitimate fear that major hubs will be caughtin a form of “gridlock” that will spread through-out the national airport system. On the otherhand, if traffic patterns change and new growth

occurs not at the airports now saturated but atother airports with adequate reserve capacity, thesystem can absorb a large amount of new trafficwithout an appreciable increase in local or gen-eral congestion and delay. Between these extremesare other possibilities, each with differing conse-quences for various types of airports and classesof airport users.

If aviation demand grows at the rate foreseenby FAA, delay will increase at high-density air-ports—perhaps intolerably—and could even spreadto other airports that are now relatively free ofcongestion. Congestion would be especially severeif traffic were to concentrate at a few large hubs,so severe that air carriers would probably seekto avoid escalating delay costs by shifting theircenters of operation to other airports. Some car-riers might shift to other suitable large hubs, but

Ch. 8—Forecasting and Trends 185

more likely the move would be to medium air-ports with adequate facilities and ample surpluscapacity—in effect breaking the pattern that nowexists at airports such as Atlanta or Chicago andselecting a site where the rehubbing carrier wouldbe the principal, if not the only, major airline atthe site. The current trend toward hub-and-spokeroute structure and the present inclination of air-lines to purchase short- and medium-range nar-rowbody aircraft seem to indicate the likelihoodof rehubbing. If so, the area of greatest interestover the next decade or so could be medium hubs,where the influx of traffic may necessitate rapid,but selective, expansion of airport facilities.

The prospect of extensive rehubbing at mediumairports does not necessarily imply that these air-ports will face a capacity crisis like that of somemajor hubs today. If the medium airports that areto serve as new hubs are chosen wisely and if thepractice does not lead to abuse,13 they offer a largecapacity reserve. The key is how the airlines re-spond in a deregulated environment where theymay compete in a variety of ways, some of whichmight offer a short-term advantage but at the costof an unbalanced use of the airport system as awhole. The full implications of rehubbing are byno means clear. On one hand, rehubbing seemsto be an attractive way to absorb growth in de-mand and provide air transportation service whileavoiding the delay costs of a large multi-airlinehub. On the other hand, we have too little ex-perience with the dynamics of an unregulated airtravel market to know how many new, smaller,single-airline hubs are economically practical.

h this setting, the reliever concept is of greatpotential value. By shifting GA traffic away fromcenters of air carrier operation while still allow-ing GA adequate access to major metropolitan

areas, relievers offer important advantages. Thereis the advantage of allowing each sector of civilaviation to grow without impediment to the other.This would not only reduce delay and its associ-ated costs for all users of metropolitan airports,it would also have important collateral effects onairport efficiency (through segregation of dis-similar types of traffic) and on airport expansioncosts. It may be less costly to upgrade one or tworeliever airports to handle more traffic than to ex-pand the major air carrier airport to absorb thesame amount. If general aviation—especially busi-ness aviation—grows as much as FAA projects,it is clear that some way will have to be foundto serve this segment of civil aviation.

For the reliever concept to work, however, itwill not be sufficient simply to push GA trafficoff to some other airport in the metropolitan area.For GA to accept this diversion and to embracethe reliever concept, the alternate airports mustprovide facilities and services appropriate to GAneeds and of quality comparable to that of themajor airport. This implies not only adequate run-ways, aprons, navigation aids, and ATC services,but also facilities for aircraft storage and mainte-nance and landside connections to activity centersin the metropolitan area. The reliever thus needsto be a mirror of the air carrier airport, not justanother place to land.

Both these observations suggest the need tothink of airports as a system, not as separate parts.The recently enacted Airport Improvement Pro-gram makes it clear that such a broad view isneeded in order to determine how to make gooduse of the infrastructure already in place and howto fit new demand into an existing system thathas large unused capacity overall, even thoughit is congested at a few points. This implies thata strategy of restructuring airport use through ad-justment of operational patterns and judicious im-provement of existing airports may be a less ex-pensive and more manageable alternative thancontinuing to build new facilities in response todemand wherever and whenever it occurs.

Chapter 9

AIRPORT SYSTEM PLANNING

.

Photo credit Dorn McGrath, Jr

Contents

PageThe Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

Airport Master Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189Regional Airport Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191State Airport Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193National Airport Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

General Problems in Airport System Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199Demand as an Independent Variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199Plans as Advocacy Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201Lack of Integration Among Plans . . . . . . . . . . . . . . . . . ............+.. . . . . . . 202

National Plan of Integrated Airport Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203The Congressional Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203Desirable Features of NPIAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204

List of Tables

Table No.48. State Funding of Airport Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49. Review of State Aviation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50. Estimated Cost of Improvements by General Categories . . . . . . . . . . . . . . . . .51. National Airport System Plan: System Needs by Program Objectives,

1980-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52. Comparison of National and State Airport System Plans, 1982 . . . . . . . . . . .

Page1 9 41 9 5

1 9 7

1 9 8

2 0 0

Chapter 9

AIRPORT SYSTEM PLANNING

Given the high cost and long leadtime for build-ing or improving airports, planning is key indetermining what facilities will be needed and increating programs for providing them in a timelymanner, while making wise use of resources. Plan-ning for airport development requires more thansimply scheduling the capital improvements to bemade. Airports are public entities, whose man-agers interact with many other public and privatestakeholders. Airport development plans affectother aspects of community life—e.g., throughthe land dedicated to aviation use or the noise orautomobile traffic that the airport generates. Theneed for aviation development must thus be weighedagainst other societal needs and plans. Further,planning cannot be done for one airport in isola-tion; each airport is part of a network which isitself part of the national transportation system.For these reasons, airport planning involves gov-ernment at all levels, as well as other public andprivate organizations.

Determining need and programming develop-ment at individual airports has become formalizedin a process called airport master planning. Whilemaster planning in the full sense is practiced pri-marily by large airports, even the smallest mustmake use of some elements of the process to pre-pare for future change. At a level above airportmaster planning is regional system planning,which is concerned with development of all air-ports in a metropolitan area. It often involves dif-

ficult political decisions on development prioritiesamong competing airports. In some cases, thisresponsibility is assumed by a regional or metro-politan planning agency, but many State gover-nments have also taken on the task of developinga coordinated system plan for airports serving notonly major metropolitan regions but also outly-ing small communities and rural areas within theState. In some cases, State agencies prepare theseplans themselves; in others, they provide techni-cal assistance and review for local planning bodies.The role of the Federal Government in airportplanning includes a broad range of activities. Themost comprehensive activity is the National Air-port System Plan of the Federal Aviation Admin-istration (FAA), which summarizes the develop-ment needs of roughly 3,200 airports across thecountry. At the other extreme, FAA has respon-sibility to approve, on a project-by-project basis,specific development projects for which airportsponsors are seeking Federal funds.

This chapter describes airport planning at vari-ous levels, with emphasis on the planning proc-ess and the problems facing airport planners ingeneral. The final part of the chapter looks moreclosely at airport system planning from a nationalperspective and addresses issues that FAA willneed to consider in preparing a new comprehen-sive planning document—National Plan of In-tegrated Airport Systems—called for in the Air-port and Airway Improvement Act of 1982.

THE PLANNING PROCESS

Airport Master Planning

At the local level, the centerpiece of airportplanning is the master plan—a document thatcharts the proposed evolution of the airport tomeet future needs. The magnitude and sophisti-cation of the master planning effort depends onthe size of the airport. At major airports, plan-ning may be in the hands of a large departmentcapable of producing its own forecasts and sup-porting technical studies. At such airports, mas-ter planning is a formal and complex process that

has evolved to coordinate large construction pro-jects (or perhaps several such projects simulta-neously) that may be carried out over a periodof 5 years or more. At smaller airports, masterplanning may be the responsibility of a few staffmembers with other responsibilities who dependon outside consultants for expertise and support.At very small airports, where capital improve-ments are minimal or are made infrequently, themaster plan may be a very simple document, per-haps prepared locally but usually with the helpof consultants.

189

— — — . . — — .

190 . Airport System Development

While there is considerable variation in the con-tent of the master plan and how it is used, its basicproducts are a description of the desired futureconfiguration of the airport, a description of thesteps needed to achieve it, and a financial planto fund development. The master planning proc-ess consists of four basic phases: 1) airport re-quirements analysis, 2) site selection, 3) airportlayout, and 4) financial planning.’

The first phase, requirements analysis, specifiesnew or expanded facilities that will be needed dur-ing the planning period. This involves catalogi-ng existing facilities and forecasting future traf-fic demand. The planner compares the capacityof existing facilities with future demand, identi-fying where demand will exceed capacity andwhat new facilities will be necessary.

The process of relating future demand to ex-isting facilities and estimating the nature and sizeof needed improvements is complex. It requiresdetailed forecasts, since sizing depends not onlyon the number of passengers and aircraft in futureyears but also on the type of the traffic. For ex-ample, traffic consisting mainly of transfer pas-sengers imposes requirements that are differentfrom those where the majority of traffic is originand destination passengers. Sizing of facilities isalso affected by the distribution of activities through-out the day and by the size and operating char-acteristics of aircraft serving the airport. Thisprocess is simplified by the use of standard rela-tionships between general measures, such as an-nual enplanements, and specific measures, suchas peak-hour passenger demand.

The second phase, site selection, is most impor-tant in the construction of a new airport. Whenconsidering the expansion of an existing airport,there is usually less choice about where to locatenew facilities. Requirements for safety areas andclear zones around existing runways and taxi-ways, for example, mean that much apparently

“vacant” land at airports cannot be used for otherpurposes. New facilities can be located only inplaces where they, and the traffic they generate,will not interfere with existing facilities. The siteselection phase for a new airport requires an in-depth analysis of alternative sites, looking closelyat such factors as physical characteristics of thesite, the nature of surrounding development, landcost and availability, ground access, and the ade-quacy of surrounding airspace. The final choiceof one site over others is often quite subjective.For example, there is probably no objective wayto compare the disadvantages of increased noisein some part of the community with the advan-tages of improved air service for the metropolitanarea as a whole. The “right” choice depends onhow decisionmakers weigh various criteria, andit is often a political, rather than a technical,choice.

In the third phase, airport layout, the locationsof planned new facilities are mapped on the air-port site. In this phase, the planner also looks athow the airport will fit into the surrounding com-munity. A land use plan is usually prepared atthis point to show existing and proposed residen-tial, business, and industrial development aroundthe airport and expected levels of aircraft noise.It shows areas which must have protected airspaceand those where building height limitations willhave to be imposed. In addition, the effect of theairport on highway and public transportation sys-tems transit is analyzed. This step is importantnot only for the safety and operational efficiencyof the airport and its compatibility with the sur-rounding community, but for the effect on thelevel and structure of airport operating costs. Fail-ure to recognize the relationships between airportconfiguration and ongoing costs can have lastingeffects on the economy of the airport and itsrevenue-earning potential.

The fourth and final phase, financial planning,is an economic evaluation of the entire plan ofdevelopment. It looks at the activity forecasts ofthe first phase from the point of view of revenuesand expenditures, analyzing the airport’s balancesheet over the planning period to ensure that theairport sponsor can afford to proceed. A corollaryactivity in this phase is preparation of a financialplan, which specifies the funding sources and

-—

Ch. 9–Airport System Planning 191

financing methods for the proposed development—the portions that will be funded through Federalgrants-in-aid, the size and timing of bond issues,the revenue from concessionaire rents, parkingfees, landing fees, and so on.

The steps outlined above often require severalyears to complete, and at most airports, masterplanning is an ongoing and continuous process.By the time the master plan has been drawn up,much of the information may be outdated, andcompilation must begin again. Thus, it is com-mon for master plans to be wholly or partly up-dated on a cycle of 3 to 5 years.

The master plan is most applicable to a rathernarrow planning problem, the development of asingle airport. Planning of a regional airport sys-tem, which addresses problems of a broaderscope, contains many elements in common withthe master planning process. However, regionalplanning is usually less concerned with the detailsof siting facilities at a particular airport than withthe adequacy of service in a given geographic areaand the roles of different airports in meeting futureneeds. While the master planning process is fairlystandardized, at least at larger airports, regionalplanning procedures vary widely among local, re-gional, State, and Federal agencies.

Regional Airport Planning

Regional airport planning takes as its basic unitof analysis the airport hub, roughly coincidentwith the boundaries of a metropolitan area. Theplanner is concerned with air transportation forthe region as a whole and must consider trafficat all the airports in the region, both large andsmall. The practice of regional planning is rela-tively new and has been instituted to deal withquestions of resource allocation and use whichoften arise when the airports in a region have beenplanned and developed individually and withoutcoordination among affected jurisdictions. Re-gional planning seeks to overcome the rivalriesand the jurisdictional overlaps of the various localagencies involved in airport development andoperation. The goal is to produce an airport sys-tem that is optimum with respect to regionwidebenefits and costs.

Thus, regional airport planning addresses onecritical issue usually not dealt with in an airportmaster plan: the allocation of traffic among theairports in a region. This can be a sensitive sub-ject. Questions of traffic distribution involve po-litical as well as technical and economic issues,and they can greatly affect the future growth ofthe airports involved. One airport may be quitebusy while another is underutilized. If traffic wereto continue growing at the busy airport, new fa-cilities would have to be constructed to accom-modate that growth. On the other hand, if someof the new traffic were diverted to an underutilizedairport, the need for new construction might bereduced and service to the region as a whole mightbe improved.

Although a planning agency may decide thatsuch a diversion is in the interest of a metropolitanregion and might prepare forecasts and plansshowing how it could be accomplished, it maynot necessarily have power to implement theseplans. Where airports are competitors, it is prob-ably not reasonable to expect that the strongerwill voluntarily divert traffic and revenues to theother. The planning agency would likely have toinfluence the planning and development processat individual airports so that they will make deci-sions reflecting the regional agency’s assessmentof regional needs.

One way to influence planning decisions isthrough control over distribution of Federal andState development grants. Before 1982, regionalagencies served as clearing houses for Federalfunds under the review process required by Of-fice of Management and Budget Circular A-95.While the award of Federal airport developmentfunds depended mainly on FAA approval of theairport sponsor’s application, the A-95 processrequired that designated regional agencies reviewprojects before the grants were awarded. In par-ticular, the regional agencies were required tocertify that the planned improvement was con-sistent with Federal regulations-for example, en-vironmental regulations.

In July 1982, the President issued Executive Or-der 12372, outlining a new policy for intergovern-mental review of direct Federal grant programs.The purpose of the new policy is to “strengthen

192 ● Airport System Development

1939

1949

1959

1969

1979

Photo credit: Dorn McGrath, Jr.

50 years of development at Los Angeles International Airport

Ch. 9—Airport System Planning ● 193

federalism by relying on State and local processesfor the State and local government coordinationand review of proposed financial assistance anddirect Federal development. . . .“ The intent is togive additional weight to the concerns of State andlocal officials with respect to federally funded de-velopment. State and local governments are en-couraged to develop their own procedures (orrefine existing procedures) for reviewing devel-opment plans and grant applications. Under thenew policy, agencies are to certify that Federalspending is consistent with State and local objec-tives and priorities, instead of certifying that Stateand local projects comply with Federal guidelines,as they did formerly. Federal agencies, such asFAA, are expected to accommodate recommen-dations communicated through the State reviewprocess or to justify refusal to do so.

Some States may choose to continue using thesame regional planning organizations as reviewagencies, while others may create new proceduresand new agencies. The Executive order discour-ages “the reauthorization of any planning orga-nization which is federally funded, which has afederally prescribed membership, which is estab-lished for a limited purpose, and which is not ade-quately representative of, or accountable to, Stateor local elected officials. ” However, States maychoose to retain the same regional agencies-theywere established under State law in the first place—but to change their function to reflect account-ability to State and local rather than Federal offi-cials. It is still too early to tell how these changesin the review procedure will affect the ability ofregional agencies to influence airport planningdecisions.

Much of the regional agency’s success may de-pend as much on negotiation and persuasion ason legal or budgetary authority. Often compro-mises can be reached on a voluntary basis. Forexample, the Regional Airport Planning Commis-sion has been working with the three San Fran-cisco area airports to help each develop a “noisebudget” to comply with California’s strict envi-ronmental laws. Because noise is directly relatedto the level of aviation activity, the noise budgetplan, when completed, will affect future trafficallocation among the airports. Its implementationwill most likely require some diversion of new

traffic growth from busy San Francisco Interna-tional to the other bay area airports.

Even where airports in a region are operatedby the same authority, allocation of traffic be-tween airports may still be difficult. For exam-ple, the Port Authority of New York and NewJersey can implement its planning decision to in-crease activity at Newark by instituting differen-tial pricing, improved ground access, or othermeasures to increase use of that airport. Imple-mentation of the policy, however, depends notjust on control of airport development expendi-tures but also on the ability to influence the activ-ities of private parties —the air carriers and pas-sengers.

Regional airport planning authorities may also,if they have planning responsibility for othertransportation modes, plan for the airport as partof the regional transportation system. Whenmultimodal planning responsibility resides in oneorganization, there is greater likelihood that theplanning agency will consider airport needs inrelation to other forms of transportation in theregion. Also, the regional agency may undertaketo improve coordination between the variousmodes, so that, for example, airport developmentsdo not impose an undue burden on surroundinghighway facilities or so that advantage can betaken of opportunities for mass transit. For thisto happen, however, two conditions are neces-sary: regionwide authority and multimodal juris-diction.

State Airport Planning

According to the National Association of StateAviation Officials (NASAO), there are 47 Stateaviation agencies that carry out some form of air-port planning. In 39 States, these agencies are sub-divisions of the State Department of Transpor-tation (DOT); in the others, they are independentagencies. Several States have an aviation commis-sion in addition to an aviation agency. The com-missions are usually appointed by the Governorand serve as policymaking bodies. State involve-ment in airport planning and development takesseveral forms: preparation of State airport sys-tem plans, funding of local master planning, andtechnical assistance for local planning. Table 48

194 . Airport System Development

Table 48.—State Funding of Airport Planning

State Fiscal year Amount

Arizona . . . . . . . . . . . . . . . . .Arkansas . . . . . . . . . . . . . . . .Connecticut . . . . . . . . . . . . .Florida. . . . . . . . . . . . . . . . . .Georgia . . . . . . . . . . . . . . . . .Hawaii . . . . . . . . . . . . . . . . . .Illinois . . . . . . . . . . . . . . . . . .Kansas . . . . . . . . . . . . . . . . .Louisiana . . . . . . . . . . . . . . .Maine . . . . . . . . . . . . . . . . . .Maryland . . . . . . . . . . . . . . . .Massachusetts. . . . . . . . . . .Michigan . . . . . . . . . . . . . . . .Mississippi . . . . . . . . . . . . . .Montana . . . . . . . . . . . . . . . .Nebraska . . . . . . . . . . . . . . . .New Hampshire . . . . . . . . . .New York . . . . . . . . . . . . . . .North Dakota . . . . . . . . . . . .Pennsylvania . . . . . . . . . . . .Rhode Island . . . . . . . . . . . .South Carolina. . . . . . . . . . .Tennessee . . . . . . . . . . . . . .Utah . . . . . . . . . . . . . . . . . . . .Vermont . . . . . . . . . . . . . . . .Virginia . . . . . . . . . . . . . . . . .

198319821982198219821982198319821982

1982-83a

198219821982198319821982

1982-83a

19831982~1982

1981-82 b

19821982198219821982

$ 60,0001,255,200

100,00250,00020,000

160,29031,0009,445

180,00018,240

102,87518,525

145,00010,00026,0007,750

30,00033,00025,00068,340

225,000124,000

13,00045,00015,50051,700

TotalC . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .$3,024,865

- . . -

1978

1971

1975

1973

1974

1974

1978

1975

1979

1979(based on1975 data)

1974

1980

1979

1975

1977

1976

d

3 years

2 years

4 years

2 years

1 year

2 years

d

6 years

2 years

d

3 years

4 years

d

3 years

d

1983

1981

1983

None

1982

None(forecastsrevised m

1981 )

d

None

None

d

None

None

None

1981

Update nowm progress

d

Yes

Yes

Yes

Yes

1974-yes1982-no

Yes

d

Yes

Yes

d

Yes

Yes

Yes

Yes

Yes

1979-2000

1981-2000

1975-2000

1983-2000

1975-95

1982-2000

1978-2000

1975-95

1979-2000

1979-2000

1975-90

1980-2000

1977-97

1975-1995

1981-2000

1975-95

Funding

No Statefunding

Funding

None

None

None

No Statefunding

None

None

None

None

None

None

None

None

None

351

600

144

83

685

365

40

344

420

163

73

259

80

251

430

333

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

d

d

d

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

d

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

196 . Airport System Development

dition of airfield capacity to accommodate growthin demand.

While there are surface similarities, SASPs varygreatly in scope, detail, expertise, and planningphilosophy. One State agency director freely ad-mitted that the State system plan was basicallya wish list, prepared primarily because planningfunds were available and the State DOT requiredit. He indicated that the plan was out of date andwould not be updated in the foreseeable futurebecause it has little relevance to the agency’s ac-tual activities. On the other hand, several Stateagencies regard the SASP as a valuable workingdocument that is kept current and serves as aguide in programming and distribution of Statefunds.

In many States, programming of funds is some-what separate from the system planning process.While the SASP may have a long planning hori-zon of 20 years or more, the actual award ofgrants to complete particular projects is on a muchshorter time scale. Some State agencies have de-veloped methods for keeping current files on localairport projects planned for the near term (say 3years). When airports apply for State aid (or re-quest State assistance in applying for Federal aid)the SASP is used to assign priority for grant awardas funds become available. As a rule, only a frac-tion of the projects outlined in the SASP areundertaken.

Each State plan reviewed by OTA tabulatedestimated costs of recommended improvementsand identified funding sources. Funding is almostuniversally identified as the primary constrainton implementation of the SASP, and nearly allcontain a caveat about the availability of funds.While other factors (e.g., noise or availability ofland) may have been considered in the planningprocess, they are seldom cited in the documentsthemselves.

In all States, some sort of consultation, coordi-nation, or review by persons outside the Stateaviation agency, is part of the planning process.Often these are regional economic developmentor planning agencies created by State government.In many cases, airport planning is part of a gen-eral transportation planning process, but meth-ods of interaction and feedback among the modal

agencies and between the State and regional agen-cies are described only vaguely.

Some State agencies are involved in masterplanning activities for local airports, especially ru-ral or small community airports that do not havethe staff to carry out master planning on theirown. State agencies may provide technical assist-ance or actually develop local master plans. SomeStates also participate in airport planning for ma-jor metropolitan areas, although most leave thisresponsibility with the local airport authority ora regional body. In recent years, State participa-tion in planning at the larger airports has shownsome increase, a trend that may be bolstered bycurrent Federal policy that earmarks a share ofannual Trust Fund outlays for State aviationplanning.

National Airport Planning

Airport planning at the national level is theresponsibility of FAA, whose interests are to pro-vide guidance for development of the vast net-work of publicly owned airports and to establisha frame of reference for investment of Federalfunds. These interests are set forth in the NationalAirspace System Plan (NASP), a document re-quired under the Airport and Airway Develop-ment Act of 1970. The NASP is a lo-year planthat is periodically updated by FAA, most re-cently in 1980.

The NASP is not a plan in the fullest sense. Itdoes not establish priorities, lay out a timetable,propose a level of funding, or commit the Fed-eral Government to a specific course of action.Instead, it is merely an inventory of the type andcost of airport developments which might takeplace during the planning period at airports eligi-ble for Federal assistance. It is a tabular, State-by-State presentation of data for individual air-ports, listed in a common format, indicating loca-tion, role, type of service, and level of activity(enplanements and operations) currently and for5 and 10 years in the future. Projected costs ofairport needs in five categories-land, paving-lighting, approach aids, terminal, and other—are shown, also at intervals of 5 and 10 years.

Estimates of need contained in the NASP aredeveloped by comparing FAA national and ter-

Ch. 9—Airport System Planning . 197

minal area forecasts to the present capacity of eachairport. Much of the initial determination of needand the regular updating is performed by FAAregional offices, which monitor changes and de-velopments being carried out at the airports. TheNASP is not a simple compilation of local mas-ter plans or State Airport System Plans, althoughFAA does draw on these documents as sourcesin forming judgments about future needs and pro-spective airport improvements.

The NASP is not a complete inventory of air-port needs. The plan contains only “airport de-velopment in which there is a potential Federalinterest and on which Federal funds may be spentunder the Airport Development Aid Program(ADAP) and the Planning Grant Program.’”There are two necessary conditions in the test ofpotential Federal interest. First, the airport mustmeet certain minimum criteria as an eligible re-cipient for Federal aid, and second, the plannedimprovement at that airport must be of a type thatis eligible for Federal aid. Eligible projects includesuch projects as land acquisition for expansion of

‘National Airport System Plan, Revised Statistics, 1980-1989(Washington, DC: Federal Aviation Administration, n.d. ), p. iii.

an airfield, paving for runways and taxiways, in-stallation of lighting or approach aids, and expan-sion of public terminal areas. Improvements in-eligible for Federal aid are not included in theNASP—e.g., construction of hangars, parkingareas, and revenue-producing terminal areas thatairports are expected to build with private, local,or State funds. Thus, the total of $12.67 billionin estimated airport needs listed in the NASP forthe 1980-89 period may somewhat underestimatetotal airport need. The estimated cost of improve-ments by general categories of eligible project isshown in table 50.

On the other hand, the NASP probably over-states the amount that will actually be spent onairport improvements over the 10-year period.Many of the projects whose costs are included inthe NASP will not receive Federal funds and manywill not be undertaken at all. Inclusion in theNASP does not necessarily represent Federalagreement to fund a project or local commitmentto carry it out. It is merely FAA’s best estimateof likely future need. The goal of the NASP is toset forth “. . . the type and estimated cost of air-port development considered by the Secretary tobe necessary to provide a system of public air-

198 ● Airport System Development

ports adequate to anticipate and meet the needsof civil aeronautics . . .“ If and when local spon-sors are ready to undertake projects, they mustapply for Federal funds.

The 1980 NASP relates airport system improve-ments to three levels of need: Level I—maintainthe airport system in its current condition, LevelII—bring the system up to current design stand-ards, and Level III—expand the system.3 In 1980,

the estimated cost of completing the NASP was$12.67 billion between 1980 and 1989. Of thisamount 16 percent was for maintaining the sys-tem, 18 percent for bringing the system up tostandards, and 66 percent for expanding the sys-tem. The distribution of the projected needs fordifferent classes of airports is shown in table 51.

The classification by three levels of need is arefinement added to the latest version of theNASP. It moves in the direction of assigningpriorities to different types of projects instead ofthe earlier practice of presenting needs as a singlesum. FW selected this presentation because pre-vious lump sum projections “often did not lend

— - —3Maintaining the system includes such projects as repaving air-

fields and replacing lighting systems; bringing the system up to stan-dards involves such projects as installing new light systems andwidening runways; expanding the system includes constructionof new airports or lengthening runways to accommodate largeraircraft.

themselves well for use in establishing the fund-ing levels of programs intended to implement theirbroad findings.” The three-level system was de-veloped as a guide to Congress, illustrating how“alternative levels of funding . . . can be basedon relating NASP development needs to threelevels of program objectives.”4

The classification system is somewhat mislead-ing because it is not as hierarchical as it might ap-pear, and the placement of a type of improvementat a particular program level does not necessarilyreflect the priority that will be given a given pro-ject. High-priority projects—i.e., those whichFAA and a local sponsor agree must be carriedout as soon as possible—may not necessarily cor-respond with “Level I“ needs in the NASP. Anexpansion project (Level III) at an extremely con-gested and important airport might be more ur-gent than bringing a little-used airport up to stand-ards (Level II). Thus, if available funds werelimited to 34 percent of total need (the amountneeded to cover Levels I and II) it would not bepossible, nor would FAA intend, to carry out onlyLevel I and II projects and leave a vital Level IIIproject unfunded. In any given year, the actualgrants awarded are used for some projects in eachprogram level.

4National Air-port System Plan, Revised Statistics, 1980-1989, op.cit., p. 6.

Table 51.— National Airport System Plan: System Needs by Program Objectives, 1980=89(total costs In 1978=79 billions of dollars)

Level 1: Level 11: Level Ill:Maintain existing Bring airports up Expand

system to standards system Total

Air carrier . . . . . . . . . . . . $1.28 $1,21 $5.50 $7.99Commuter service . . . . . 0.11 0.11 0.24 0.46Reliever . . . . . . . . . . . . . . 0.13 0,25 0.62 1.00General aviation . . . . . . . 0.52 0.75 1.95 3.22

Ch. Airport System Planning ● 199

The NASP has been criticized for drawing theFederal interest too broadly and for being moreof a “wish list” than a planning document. Criticshave claimed that it is merely a compilation ofimprovements desired by local and State author-ities and that it does not represent a careful assess-ment of airport development projects that trulyserve national airport needs as distinct from thosethat are primarily local or regional in character.It is true that the plan includes many very smallairports of questionable importance to the na-tional system of air transportation. The criteriafor inclusion in the NASP are minimally restric-tive. The principal ones are: 1) that the airporthas (or is forecast to have within 5 years) at least10 based aircraft (or engines), 2) that it be at leasta 3&minute drive from the nearest existing or pro-posed airport currently in the NASP, and 3) thatthere is an eligible sponsor willing to undertakeownership and development of the airport. Clearly

there are many airports that meet these minimumcriteria. As of the beginning of 1984, there were3,203 airports qualifying for inclusion in theNASP—roughly a minimum of one airport percounty.

Paradoxically, the NASP has also been criti-cized for just the opposite reason: it is too ex-clusive, in that it reflects only FAA’s interpreta-tion of national importance and not those of Stateor regional planning agencies. There are about1,000 airports, not listed in the NASP, that areintegral parts of State and regional developmentplans; and their exclusion means that sponsors orState planning agencies cannot expect Federal aidfor developing these facilities. Table 52 shows acomparison of the airports included in NASP andin State system plans. Only in three cases (Florida,Iowa, and New York) does the NASP includemore airports than the State plan.

GENERAL PROBLEMS IN AIRPORT SYSTEM PLANNINGAirport planning, as practiced today, is a for-

malized discipline that combines forecasting, engi-neering, and economics. Because it is performedlargely by government agencies, it is also a polit-ical process, where value judgments and institu-tional relationships play as much a part as tech-nical expertise. On the whole, airport plannershave been reasonably successful in anticipatingfuture needs and in devising effective solutions.Still, mistakes have been made—sometimes be-cause of poor judgment or lack of foresight andsometimes because of certain characteristics of theplanning process itself. In effect, the process andthe methods employed predispose planners to-ward solutions that may be “correct” for a singleairport but perhaps not for the community, re-gion, or airport system as a whole. As a result,airport plans may take on a rigidity that is inap-propriate in light of changing conditions or a nar-rowness of focus that does not make best use ofresources.

Demand as an Independent Variable

A major problem in the planning process at alllevels is the tendency to treat demand as an inde-

pendent factor. Planners forecast future demandand then use those forecasts to justify the needfor facilities, to frame their design, and to ascer-tain whether there will be sufficient revenue topay for them.

Basic economics indicates that supply and de-mand exist in an equilibrium relationship that ismediated by price. When prices fall, demand in-creases; when prices rise, demand falls. The sys-tem is in equilibrium when price reaches a levelwhere supply exactly equals demand. This basicrelationship holds for airport supply (capacity)and demand, as in other market situations. Pricein this case includes not only monetary trans-actions but also the speed and convenience of airtransportation and the cost of delay. The plan-ning process, however, does not typically ap-proach airport needs from a market perspective.

The predisposition to treat demand as an in-dependent variable in the planning process is il-lustrated by FAA’s guidelines to airport plannerson how to make forecasts in support of masterplans (written in 1971 but still current). After at-tributing the then current “airport crisis” to lowforecasts in the past, the guidelines instruct plan-

25-420 0 - 84 - 14

. . . .

200 ● Airport System Development

Table 52.-Comparison of National and State Airport System Plans, 1982

Airports in SASPb Airports in NASP

State Total airports Number Percent Number Percent

193689224105297312

2837

514125

51

&36535537611529216049

216291597166393

; $128

522711564862865556742924101612082

16282

8963

205322

90421105

84c

9486

2978326

4105136d

171601139280

1117395473936

16614178

1311191214612676081

11285

12617489

195d6

6584g l d

292512377

191c

111

42

44—4282

10027931120

10933821325233063332960176424473363373623

: :173915196022

121307952

1115857373859—2640

72275

5666

22056164

126111

16389482

: ;5460343132

1048375

100727627124044917850

1051046291

6535578

2263913

:308429

374025637418571125893119

; ;262447212163153614452538232123

; :1927

9

:15

X65

z454421

: ;332028

Totals . . . . . . . . . . . . . . . . . . . 13.136 4.634 35 3.599 27

Ch. 9—Airport System Planning ● 201

ners not to consider possible constraints on avia-tion demand in developing forecasts, except in cer-tain limited cases. Rather, it advises the plannerto focus on the “total demand potential” of theairport:

In the [planner’s] development of [airport activ-ity] forecasts, an unconstrained approach is usu-ally the best approach . . . .

The “unconstrained” forecast represents the po-tential aviation market in which all of the basicfactors that tend to create aviation demand areused, without regard to any constraining circum-stances . . . that could affect aviation growth atany specific airport or location. Using this ap-proach, it is possible to determine the theoreticaldevelopment needs in accordance with the totaldemand potential. For an airport serving an ex-ceptionally high activity metropolitan area, how-ever, potential constraints and alternative meth-ods to reduce them should be considered (emphasissupplied ).5

It is particularly noteworthy that the documentinstructs planners to consider constraints on de-mand solely for the purpose of finding ways toreduce them.

Treatment of demand as an independent vari-able is rooted in the practice of civil engineeringwhen designers have to plan facilities for eventstotally beyond their control. In designing a floodcontrol project, for example, the demand on thefacility is purely a function of natural forces overwhich the planner can exercise no control. De-mand on an airport, however, is not an uncon-trollable natural phenomenon; it responds tochanges in the price of using the airport. For ex-ample, there is presumably some set of marketconditions under which no one would fly betweenthe hours of 5 and 7 p.m., even though this is cur-rently the period of peak demand. Alternatively,if adequate facilities are not provided, some de-mand wiIl be suppressed. No such similar respon-siveness exists in the natural demand placed onflood control facilities.

The costs of sizing the system to serve peak-period demand are very high. To the extent thatpassengers are willing to bear that cost, the in-

‘Airport Muster Plans, Advisory Circular AC 150/5070+5 (Wash-ington, DC: Federal Aviation Administration, 1971), pp. 11, 13.

vestment in facilities to accommodate this demandis a good use of economic resources. Yet, thestructure of the entire system is based on the prem-ise that the passengers are willing to bear the cost,and they are rarely given a choice to save moneyby altering the time of day at which they chooseto fly. While airlines sometimes provide discountsto night passengers or to those flying in slacktravel seasons, these are exceptions. Usually, theprice of traveling at the peak period is no morethan at offpeak periods.

The lack of incentives for traveling during off-peak periods is to some extent a problem reachingbeyond airport planning per se. If airport spon-sors choose not to institute peak-hour prices, plan-ners have littIe choice but to accommodate thatdecision. At the same time, however, the plan-ning process often fails to identify alternatives tosizing facilities for unconstrained peak load. Insome cases such alternatives may be preferableor, at the very least, worthy of consideration inthe planning process.

Plans as Advocacy Documents

While the airport planning process may takeinto account the desires of the community servedby the airport, the master plan itself often has adistinctly advocative flavor. This is perhaps bestillustrated in a passage from the introduction toFAA’s guidelines to airport planners on masterplanning:

. . . This advisory circular recommends pro-cedures to be followed in making the master planstudy of the individual airport and suggests meth-ods of coordinating, organizing, and presentingthe master plan document so that it will be aviable tool for the promotion of airport improve-ments (emphasis supplied).6

Such use of the master plan raises some disturb-ing questions about the process. Should the plan-ning process plan be a medium for promoting aparticular plan for airport development, chosenby the planner or airport operator, who usuallyhas a vested interest in building or expanding theairport? Or should it present a set of optional de-velopment paths for community decisionmakers?If advocacy of development is an appropriate use

bIbid., p. 3.

202 . Airport System Development

of the master plan, then should not some forumbe available to weigh airport development againstother community needs and to integrate airportprojects with other community plans?

In practice, the political body with jurisdictionover the airport performs this oversight function,but it is hampered by planning documents thatpresuppose the desirability of airport expansion.The master plan is often quite thorough in pre-senting alternative forms of expansion and in ar-raying the pros and cons of each. It is usuallysilent on the more fundamental questions ofwhether any improvement should be undertakenand what options there are besides airport devel-opment.

Lack of Integration Among Plans

Airport planning at local, regional, State, andFederal levels is not well coordinated and in-

tegrated. To some extent, this arises naturallyfrom different areas of concern and expertise. Atthe extremes, local planners are attempting to planfor the development of one airport, while FAAis trying to codify the needs of several thousandairports which might request aid. Local plannersare most concerned with details and local condi-tions that will never be of interest to a nationalplanning body.

The lack of common goals and mutually con-sistent approach is also evident between Federaland State planning. Over 10 years ago, the Fed-eral Government recognized the need to strengthenState system planning and provided funds for thispurpose under ADAP, and nearly all the StateAirport System Plans have been prepared withFederal funding. However, it does not seem thatFAA has always made full use of these productsin preparing the NASP. The State plans containmany more airports than the NASP, and thepriorities assigned to airport projects by States do

—Photo credit: Aviation Division, County of Los Angeles

Urban encroachment at a GA airport

Ch. 9—Airport System Planning ● 203

not always correspond to those of the NASP.While it is probably not desirable, or even possi-ble, for the NASP to incorporate all elements ofthe State plans, greater harmony between thesetwo levels of planning might lead to more orderlydevelopment of the national airport system.

There is also a lack of coordination betweenairport planning and other types of transporta-tion and economic planning. This is particularlyevident in the case of land use, where airport plansare often in conflict with other local and regionaldevelopments. Even though the airport author-ity may prepare a thoroughly competent plan,lack of information about other public or privatedevelopment proposed in the community (or fail-ure of municipal authorities to impose and main-tain zoning ordinances) allows conflicts to developover use of the airport and surrounding land. Thisproblem can be especially severe where there areseveral municipalities or local jurisdictions sur-rounding the airport property.

An additional problem is the lack of integra-tion of airport planning with that for other modes

of transportation. An airport is an intermodaltransportation center, where goods and peopletransfer between the ground and air modes. Itforms an important link in the total transporta-tion system of a region. The ground transporta-tion system providing access to the airport canbe a significant contributor to congestion, delay,and the cost of airport operation. Yet, airportoperators have little authority or influence overdecisions on transportation beyond the airportproperty line.

At the national level, there is also a lack of in-tegrated planning within FAA. There does notseem to be close coordination between FAA’s Na-tional Airport System Plan and the NationalAirspace System Plan. While the two plans arebased on the same aviation demand forecasts,they have not been brought under a commonschedule. Nothing has been published to showhow the airport improvements contained in oneplan will interact with air traffic control (ATC)improvements proposed in the other.

NATIONAL PLAN OF INTEGRATED AIRPORT SYSTEMS

The Airport and Airway Improvement Act of1982 (Title V, Public Law 97-248) reflects astrengthened congressional commitment to airportplanning. At the regional and State levels, the lawdedicates 1 percent of Federal airport developmentfunds for planning, with availability contingenton a demonstrable (not demonstrated) ability toconduct regional planning. As such, the new lawprovides an opportunity for State governmentsand regional agencies to institute or expand theirplanning efforts.

The Congressional Mandate

The act calls for refinement of the national air-port planning process by instructing the Depart-ment of Transportation to develop a NationalPlan of Integrated Airport Systems (NPIAS) bySeptember 1984. The description of this plan inthe legislation makes it clear that the intent is toexpand and improve planning at the national

level. Specifically, the act calls for “integrated air-port system planning,” which it defines as:

. . . the initial as well as continuing develop-ment for planning purposes of information andguidance to determine the extent, type, nature,location, and timing of airport developmentneeded in a specific area to establish a viable,balanced, and integrated system of public-useairports. 7

Planning includes identification of system needs,development of estimates of systemwide devel-opment costs, and the conduct of such studies,surveys, and other planning actions, includingthose related to airport access, as may be neces-sary to determine the short-, intermediate-, andlong-range demands that the airport must meet.

The policy declaration points out several waysin which the planning effort is to be “integrated. ”It states that:

‘Public Law 97-248, Title V, $503 (a) (7).

204 ● Airport System Development

. . . it is in the national interest to develop inmetropolitan areas an integrated system of air-ports designed to provide expeditious access andmaximum safety. . . . [and it is in the national in-terest to] encourage and promote the developmentof transportation systems embracing variousmodes of transportation in a manner that willserve the States and local communities efficientlyand effectively.8

From this it is evident that the legislation re-quires a plan which is “integrated” in two ways:1) geographically, in the sense that all airports ina region are to be considered together; and 2) in-termodally, in the sense that planning for the avia-tion should be part of the planning for the regionaltransportation system as a whole. The require-ments of the act will bring FAA’s airport plan-ning process into closer relation with metropolitanand regional transportation planning than everbefore.

Desirabie Features of NPIAS

The NPIAS is not scheduled for publication un-til September 1984, and it is not yet clear howFAA will respond. Certainly the task will requireeither major modifications of the planning proc-ess that has produced the NASP or developmentof a completely new planning tool to respond tothe intermodal and regional aspects of the con-gressional mandate. As an aid to Congress inevaluating the plan when it is released, OTA of-fers the following general comments about fea-tures that would be desirable in an integrated na-tional airport plan.

Comprehensiveness

First of all, the NPIAS should be truly nationalin scope. A national plan may not need to includeevery airport in the country, but it should ex-plicitly define the interest of the Federal Govern-ment with respect to airports of all sizes and pur-poses. The current NASP has been criticized bothfor being too broad and for being too exclusive.On the one hand, many airports are included inthe NASP are of scant importance to the nationalsystem of air transportation. On the other hand,the NASP excludes about 1,000 airports that are

‘Public Law 97-248, Title V, $502 (a) (9) and $502 (b).

part of State Airport System Plans or that mayotherwise have some regional importance. Thedifficulty might be traced to the fact that airportsare either “in” or “out” of the NASP. A com-prehensive system plan may have to define ahierarchy of Federal interest, specifying differentdegrees of importance and eligibility for funding.

A complete plan will thus have to start witha careful definition of a national airport systemand the airports that make it up. It is entirely pos-sible that the degree of Federal interest will notbe the same for all types of airports, dependingon their size, mission, and locale. In some cases,airports may be of only local or regional impor-tance and of no direct interest to the FederalGovernment. However, if the plan is to be com-prehensive, these airports should be identified andperhaps earmarked for consideration in State orregional plans.

Comprehensiveness also requires that the NPIASaddress all types of development. Some types ofimprovements, particularly those to be made withFederal funds, will be of chief concern. However,in the interest of completeness, the plan will haveto assess total airport system costs, not just thoseeligible for funding through the Airport Improve-ment Program. Further, a complete plan will haveto consider, from the viewpoint of total systemcosts, where there are more cost-effective alter-natives to investment in new or expanded facil-ities. In addition to projects for accommodatinggrowth, it will be necessary to consider methodsfor directing and managing demand growth to fitwithin existing capacity.

Integration

The act specifically calls for integrated region-wide planning, but formulation of the NPIAS af-fords FAA the opportunity to integrate the plan-ning process even further by developing a cohesiveand hierarchical planning system in which re-gional or statewide system planning activities aremeshed into airport planning at the national level.Further, this broader concept offers the oppor-tunity to devise a system for coordinating airportplanning more closely with system planning forother modes of transportation, at both the re-gional and national level.

Ch. 9—Airport System Planning ● 205

It is especially important that the NPIAS seekto integrate airport planning with two other ma-jor FAA planning efforts—the National AirspaceSystem Plan (NAS Plan) and the National Air-space Review (NAR). Initial funding for the NASPlan was also approved in the 1982 Airport andAirway Improvement Act. This plan, publishedin early 1982, outlines FAA’s future improvementsto the en route and terminal area ATC systemsover the next 10 years. The NAR is a 42-monthstudy of air traffic procedures, begun in June 1982

as a joint undertaking of FAA and aviation in-dustry representatives. Its objectives are to im-prove the efficiency of traffic flow in the airspacesystem by revising regulations and instituting newprocedures that reflect technological improve-ments in aircraft and air traffic control.

The three segments of the aviation system—airports, ATC facilities, and airspace use pro-

cedures—need to be developed in coordination.Piecemeal development could lead to inefficien-cies, bottlenecks, and misdirected investment. Forexample, it would probably be a waste of re-sources to add runway capacity at an airport ifthe ATC system cannot be upgraded to handlethe additional traffic in that area until severalyears later. Conversely, there is little advantagein seeking to move traffic more expeditiously be-tween airports only to have it encounter delaysin the terminal areas where improvements havenot yet been scheduled or implemented. Integrateddevelopment of airports, ATC facilities, and airtraffic procedures will be necessary to obtain max-imum benefit from any one of the parts and toensure cost-effective investment.

Priorities

Another important consideration will be theidentification of priorities for implementation and

Photo cradlt: Faderal Aviation Admlnlstratlon

Recently completed airfield, terminal, and landside expansion at Los Angeles International Airport

206 Airport System Development

funding by class of airport and type of need. FAAattempted in the latest version of the NASP toclassify needs according to three levels of programobjectives: 1) maintain existing system, 2) bringairports up to standards, and 3) expand the sys-tem. Within these levels, gross estimates of needsfor each class of airport (air carrier, general avia-tion, etc. ) are made. While this classification sys-tem represents a good start, it is still not fullysatisfactory. The NPIAS plan should include ascheme for relating specific types of airport pro-jects to systemwide objectives and assigning pri-orities to specific projects. Such priorities couldaid FAA in evaluating the systemwide effects ofspecific program actions and serve as a guide inthe distribution of capital development funds.

Multiple Planning Horizons

Another desirable characteristic of the planwould be the use of multiple planning horizons.Development of airports is an ongoing processand a given plan of improvements often takes anumber of years to complete. The large-scale in-vestments are often “lumpy,” and a period of in-tense development and heavy investment at anairport may be followed by a lull of several years.The use of several planning horizons-perhaps of5, 10, and 20 years—would aid in integratingshort-term improvements into smoother long-term investment paths at each airport. It wouldalso help to relate improvements at individual air-ports to broader system goals. Given the uncer-tainties of forecasting, long-range projections aresubject to greater error and therefore must betreated more flexibly. Procedures for periodicrevision and updating of the plan would allow forthese longer-range projections and decisions to bereviewed and adjusted. Use of multiple planninghorizons is already a a characteristic of the NASP,which sets out airport-by-airport needs on a 5-and 10-year basis. The horizon might usefully beextended to 20 years, with the latter 10-yearperiod intended as no more than an approxima-tion (or “early warning”) of long-range trends andneed.

Time phasing of improvements is an importantfeature that has been missing in previous FAA air-

port system plans. As a general rule, planned air-port developments should be related to an over-all schedule determined by forecasted growth,expected leadtime, and relationships with the ele-ments of the NAS Plan and the NAR. The devel-opment schedule for all parts of airspace system—airports, ATC facilities, and air traffic procedures—should be tied together in a common planningframework. For example, if under the NAS Planan airport is to receive ATC improvements thatwill increase airside capacity, this should be re-flected in the airport system plan as it may dic-tate other terminal or landside improvements.Conversely, in planning ATC improvements toincrease capacity, implementation should be sched-uled first at those airports where they will havethe most beneficial effect.

It may be well, insofar as possible, to buildthese schedules around “trigger events.” For ex-ample, instead of scheduling improvement atsome airport for a particular year, implementa-tion might be made conditional on passengerenplanements or aircraft operations reaching somespecified level. This approach has two advantages.It provides protection against the inevitable in-accuracy of forecasts, and it allows flexibility inmatching improvements with need.

Coordination and Review

There will be a need for periodic review andupdate. To see that the broadest range of interestsare taken into account, the initial planning andthe review process should be conducted in coop-eration with State, regional, and local planningauthorities and with the aviation community atlarge. The consultative planning technique re-cently employed by FM in the National AirspaceReview and the Industry Task Force on AirportCapacity Improvement and Delay Reduction hasbeen useful not only in helping FAA recognize andaccommodate diverse interests, but also in enrich-ing the planning process. Involvement of otherplanning agencies and private organizations rep-resenting airport users in a continuing dialoguewill ensure that improvements contemplated inthe NPIAS are in harmony with user needs andthe objectives of State, regional, and local avia-tion agencies.

Chapter 10

POLICY CONSIDERATIONS

Contents

PagePolicy History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

Assessment of Federal Airport Policy... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212

Alternative Federal Airport Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216Funding Undercurrent Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218Defederalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219Selective Federal Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222No Federal Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226State Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229

List of Tables

Table No. Page53. Sources of Airport Investment Funds, 1978-82 . . . . . . . . . . . . . . . . . . . . . . . . . . 21854. Projected Airport Capital Needs and Sources of Funds . . . . . . . . . . . . . . . . . . 21855. Federal Airport Aid (Defederalization Policy) . . . . . . . . . . . . . . . . . . . . . . . . . . 21956. Federal Airport Aid (Selective Aid Policy) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22457. Federal Airport Aid (State Administration Policy) . . . . . . . . . . . . . . . . . . . . . . 230

List of Figures

Figure No. Page24. Distribution of Airport Aid Funds Under ADAP and AIP . . . . . . . . . . . . . . . 214

Chapter 10

POLICY CONSIDERATIONS

POLICY HISTORY

The Air Commerce Act of 1926 marked thebeginning of Federal regulation of air traffic andaviation safety. At the time the law was enacted,aviation was an infant industry. There was awidely held view that aviation was hazardous,and some doubted that the airplane would everhave much commercial importance. There wereothers, however, who recognized that benefits,both commercial and military, might accrue tothe Nation if safety could be improved and themanufacture and use of aircraft were fostered andencouraged. Direct subsidy to the aircraft manu-facturing and air transportation industries wasthought inappropriate, but Congress did empowerthe Department of Commerce to chart the air-ways, to maintain navigation facilities, and to actin other ways to promote air commerce. A yearbefore, in the Airmail Act of 1925, Congress hadauthorized the Post Office Department to contractfor domestic mail service, thereby giving impetusto formation of airlines and providing an impor-tant source of operating revenue for the new in-dustry.

The 1926 legislation included no provision forFederal involvement in airport development. Inthe debate leading to passage of the Air CommerceAct, Congress considered but rejected the idea thatairports were a matter of Federal interest. It wasthought that airport development should be leftto local initiative and that Federal policy towardairports and airways should be analogous to thatfor ports and waterways:

The Federal Government established and main-tained lighthouses, dredged channels, and fur-nished weather forecasts; it left to municipalities,however, the establishment and control of portfacilities. It followed, therefore, that while theGovernment should chart airways, provide air-way lights for night flying, maintain emergencyfields, and furnish weather reports to pilots, itwould leave to municipal authorities the control

of airports. In other words, airways were likechannels or harbors; airports were like docks. 1

On this line of reasoning, the 1926 Act con-tained a specific prohibition against Federal in-volvement in the construction of airports, therebyestablishing the “dock” concept, which remainedFederal policy until 1940.2 However, when theCivil Aviation Act was passed in 1938, Congressbegan to reconsider airport policy. The principalpurpose of the 1938 Act was to establish a newindependent agency, the Civil Aeronautics Ad-ministration (CAA), to be responsible for eco-nomic regulation of air carriers. There was noauthorization of airport aid, but neither was itprohibited. Instead, the act directed the CAA Ad-ministrator to survey airport facilities and to makea recommendation to Congress about the ad-visability of Federal Government participation inairport construction and maintenance. Before thisstudy and recommendation could be acted upon,World War II began in Europe; and Congress, tak-ing the view that development of a strong sys-tem of airports was vital to national defense,appropriated $40 million for construction and im-provement of 250 airports.

National defense, or national security, becamethe major rationale for Federal participation in air-port development from that time forward. Fed-eral assistance to airports continued through thewar years; and, after the war, Congress appro-priated a total of $500 million over 7 years in theFederal Airport Act of 1946. The 1946 Act wasthe first legislation to deal specifically with civilairport development, and part of its justificationwas that a strong system of municipal airportswould be of vital importance in a war or other

1 U. S. Senate, Report to Accompany H.R. 4209, “Department ofTransportation and Related Agencies Appropriation Bill, 1982,”Report No. 97-253, p. 10.

‘It was perhaps due to the dock analogy that the term “airport”came into common use. Before that time, airports were generally

referred to as airfields or aerodromes.

209

—

210 . Airport System Development

Photo credit: Federal Av/atlon Administration

Then . . .

national emergency. The act provided capitalgrants in the form of matching funds to encourageState and municipal initiative in building and im-proving publicly owned airports. This programof aid, financed from the General Fund, continueduntil 1969.

During the period 1946-69, Congress tookanother significant step when it reorganized theFederal Government agencies responsible for reg-ulating air transportation and administering avia-tion programs. The Federal Aviation Act of 1958transferred responsibility for the technical aspectsof air traffic control (ATC) and aviation safetyto the newly created Federal Aviation Agency—later Federal Aviation Administration (FAA) leav-ing economic regulation to the CAA, which wasrenamed the Civil Aeronautics Board (CAB). Theact contained a statement of policy indicating thatCongress retained its traditional view that pro-motion of safe and efficient civil aviation was inthe national interest, and national defense re-mained a dominant theme. The FAA Administra-tor was, among other things, charged with:

●

●

●

the regulation of air commerce in such a man-ner as to best promote its development andsafety and fulfill the requirements of nationaldefense;the promotion, encouragement, and devel-opment of civil aeronautics; andthe control of the use of the navigable air-space of the United States and the regulationof both civil and military operations in such

airspace in the interest of the safety and effi-ciency of both.3

To carry out the responsibilities of managingthe airspace, FAA also received authority to ap-prove the siting of airports and to administer Fed-eral funds for airport development.

FAA came into existence at a time of greatchange in the aviation industry. Traffic growthwas placing excessive demands on both the ATCsystem and airports. By 1958, the major airlineswere beginning to replace their aging equipmentwith jet aircraft, which offered much greater oper-ating efficiency, higher speed, and better serviceto the traveling public. The advent of jets, how-ever, placed great pressures on the airport sys-tem. Because of speed, size, and weight of jet air-craft, runways, taxiways, and aprons had to beredesigned, and passenger terminals had to bemodified or rebuilt to handle jet aircraft and thelarger volume of passengers per flight. Whilejets were first used only in a few high-density,long-haul markets, it was apparent after a fewyears that they would be economical for usethroughout the system and that hundreds of air-ports would have to be upgraded or stand in dan-ger of losing air service.

The expansion and modernization of many air-ports was paid for by local airport sponsors withhelp from funds available under the Federal Air-port Act. However, the amount of aid available

3Federal Aviation Act of 1958, Public Law 85-726, Aug. 23, 1958.

Photo credit: Federal Aviat/on Administration

. . . and now

Ch. 10—Policy Considerations ● 211

under the act was small (about $75 million peryear), and Congress was becoming increasinglyuncomfortable with what amounted to direct sub-sidy of the aviation industry through GeneralFund appropriations. Congress responded to theseconcerns with the passage of the Airport and Air-way Development Act of 1970 and a companionrevenue bill.

The 1970 Act established the Airport and Air-way Trust Fund and levied an airline ticket tax,general aviation (GA) fuel tax, and other user feesto provide revenue. The user-supported TrustFund ended the need for airports and the ATCsystem to compete with other national prioritiesfor appropriations from the General Fund. Partof the Trust Fund was used to pay for the mod-ernization of the ATC system, a program whichFAA had started in the late 1960s. In addition,the Trust Fund supported the Airport Develop-ment Aid Program (ADAP), which providedgrants to assist airport operators in funding cap-ital projects. Between 1971 and 1980 the TrustFund received approximately $13.8 billion, ofwhich $4.1 billion was invested in the airport sys-tem through ADAP grants.

Passage of the Air Cargo Deregulation Act of1976 and, more importantly, the Airline Deregu-lation Act of 1978, signaled an end to the 40-yearhistory of economic regulation of the airline in-dustry. The deregulation of airlines was part ofa general trend gaining momentum in the 1970sto reduce Government regulation of private in-dustry. By this time, many observers in Congressand elsewhere had begun to doubt that Federalregulation was encouraging orderly competitionand had come to suspect that the regulatory proc-ess was imposing unnecessary costs and creatingdistortions in the marketplace. Even before Con-gress passed the deregulation acts, CAB itself hadconducted a number of experimental reductionsof certain types of regulation in order to encouragecompetition. With the 1978 Act, the market wasopened to new firms, and carriers gained muchgreater freedom to enter or leave markets, tochange routes, and to compete on the basis ofprice. The 1978 Act also called for the “sunset”of the CAB by the end of 1984, with transfer ofits few remaining essential functions to otheragencies.

Deregulation has had a profound effect on theairport system. Once air carriers were permittedto change routes without CAB approval, theydropped many unprofitable points, confirming thefears of some opponents of deregulation that airservice to small communities would suffer. Serv-ice to some smaller cities continued under the“Essential Air Service” provisions of the Deregu-lation Act, which provides subsidies (through1988) to the last carrier in a market so as to pre-vent selected cities from losing service altogether.In many cases, small commuter carriers enteredthe markets abandoned by larger carriers. In ad-dition, the airlines’ new freedom has greatlychanged their relationships with airport operators,who can no longer depend on the stability of theearners serving the airport and who must accom-modate new entrants.4

One of the major issues affecting airport devel-opment, especially since the beginning of the jetage, has been aircraft noise. FAA has respon-sibility for regulating aircraft noise—in the Fed-eral Aviation Regulations Part 36 (1969) and Part91 (1976)—and for establishing procedures forairspace use. However, the Federal Governmenthas not taken on the task of directly regulatingthe noise level at a given airport; this is consid-ered the province of the airport operator. TheAviation Safety and Noise Abatement Act, passedby Congress in 1979, was intended to “provideassistance to airport operators to prepare andcarry out noise compatibility programs. ” It au-thorizes FAA to help airport operators developnoise abatement programs and makes them eligi-ble for grants under ADAP.

The Airport and Airway Development Act ex-pired in 1980 and Congress did not agree onreauthorizing legislation until passage of the Air-port and Airway Improvement Act of 1982. Dur-ing fiscal years 1981 and 1982 the taxing provi-sions of the Trust Fund were reduced, and revenueswere deposited in the General Fund and the High-way Trust Fund. However, Congress continued

— —‘Air Service to Small Communities (Washington, DC: U.S. Con-

gress, Office of Technology Assessment, OTA-T-170, February1982).

212 ● Airport System Development

. .:.

to appropriate airport aid—$450 million for eachof the 2 years. At least part of the delay in pass-ing new legislation was due to the debate over “de-federalization,” an action which would have madethe Nation’s largest airports ineligible for Federalaid on the grounds that they were capable of sup-porting themselves financially. Defederalizationwas dropped from the final version of the legis-lation, but Congress directed the Department ofTransportation to study the matter further andto report at a later date.

The 1982 Act reestablished the operation of theAirport and Airway Trust Fund (with a revisedschedule of user taxes) and authorized a new cap-ital grant program, called the Airport Improve-ment Program (AIP). In basic philosophy, AIPis similar to the previous ADAP. The principalchanges are in the formula for distribution of air-port aid and in the criteria of eligibility. Overall,the Airport and Airway Improvement Act of 1982authorizes a total of $4.3 billion in airport aid forfiscal years 1983 through 1987.

Photo cradlt: Federal Av/ation Admlnlstratlon

The continuing problem of noise

ASSESSMENT OF FEDERAL AIRPORT POLICY

In large measure, the system of airports thatwe have in the United States today owes its ex-istence to Federal policy, whose express purposehas been to foster the development of civil avia-tions In the earliest years of civil aviation, theGovernment’s actions were confined to subsidyof aircraft manufacturers through military pur-chases and indirect support of aircraft operatorsby airmail contracts. Since airports were regardedas essentially local enterprises, they did not re-ceive Federal aid. But from the beginning, civilaviation was perceived as an adjunct to militaryaviation in providing national defense, and in theWorld War II era this became the rationale fordirect Federal Government assistance to civil air-

—5 For example section 305 of the Federal Aviation Act of 1958,

which established the Federal Aviation Administration, states that“the Administrator is empowered and directed to encourage andfoster the development of civil aeronautics and air commerce in theUnited States and abroad” (emphasis supplied).

ports. In the years after 1945, the Federal Gover-nment took an even more important step in sup:porting the civil airport system when it turnedover to local authorities hundreds of airports thathad been built and operated as military installa-tions but were then deemed surplus. This infu-sion of capital facilities not only expanded the air-port network serving commercial aviation, it alsoencouraged the purchase and use of GA aircraftby assuring ample landing facilities within reachof nearly everyone in the country.

By 1960, this divestiture of military holdingshad largely run its course, and the emphasis ofFederal policy shifted to upgrading and expansionof major airports to accommodate jet aircraft andto alleviate problems of congestion and delay inairline traffic that were beginning to emerge.Smaller airports were not neglected, however. Be-tween 1960 and 1970, $510 million—about 20

Ch. 10—Policy Considerations ● 213

percent of all Federal expenditures for airport cap-ital improvements—were directed to small com-munities and to improving the quality of GA fa-cilities. In addition to construction and improvementof runways and airfield facilities, the FederalGovernment aided general aviation in other ways.The network of Flight Service Stations was ex-panded, and the number of airports with FAA-operated control towers grew substantially, withnearly all of the additions coming at smaller air-ports. Safety of civil aviation was an importantmotivating factor, but so too was the desire toestablish and maintain an extensive system ofwell-equipped airports serving all classes of civilaviation, providing readily available commercialair transportation and operating bases for aircraftused for business purposes and private flying.

The passage of the Airport and Airway Devel-opment Act of 1970 institutionalized Federal air-port aid by establishing the Airport and AirwayTrust Fund, supported by user fees, which pro-vided a dedicated source of revenue for capitalimprovement. This act not only committed Fed-eral support to the airport system, it also gavethe Federal Government a strong, perhaps domi-nant, voice in how that system would develop.By identifying the kinds of airports eligible forcapital grants, by specifying the types of projectsthat would be supported, and by establishing for-mulas for Federal, State, and local funding, theAirport Development Aid Program effectively setthe pattern of airport development for the 1970s.After a brief period of uncertainty in 1980-82,when Congress allowed the legislative authoriza-tion of ADAP to lapse, previous Federal policyon airport development was reaffirmed in Sep-tember 1982 with passage of the Airport and Air-way Improvement Act of 1982, which establishedthe Airport Improvement Program. b

AIP preserved the general approach to airportaid established under ADAP, with certain revi-sions to correct what were perceived as imbal-

6 Section 502 of the act finds and declares that “continuation ofairport and airway improvement programs and more effectivemanagement and utilization of the Nation’s airport and airwaysystem are required to meet the current and projected growth ofaviation and the requirements of interstate commerce, the PostalService, and the national defense.” 96 Stat. 671, Title V, sec.502(a)(2).

ances in the allocation of funds and to adjust theshares paid into the Trust Fund by various classesof airport and airspace users through ticket andfuel taxes. The principal differences betweenADAP and the new AIP are in the proportion ofFederal aid to be allocated to air carrier, reliever,and GA airports, the earmarking of 8 percent fornoise projects, and extension of Federal aid forthe first time to privately owned GA airports (seefig. 24).

Investment of $4.1 billion in Federal moneysfor airport capital projects under ADAP between1971 and 1980 and $7.9 billion more in State andlocal funds enabled the airport system to keepabreast of construction needs, but not to elimi-nate the chronic delay problems at a dozen or somajor metropolitan airports. The capacity gainsachieved at major airports were largely offset bygrowth in passenger traffic, which rose by about75 percent during the decade. As a result, the sit-uation at these airports now is about the same asit was in the late 1960s. If FAA forecasts are cor-rect, however, capacity problems may emerge atmore airports in the next 10 to 20 years, possiblyaffecting as many as 60 air carrier airports by theend of the century. There may also be a shortageof facilities for general aviation in major popula-tion centers, notably in the Sun Belt States of theSouth and West. It is therefore appropriate to askhow past policy has contributed to this situationand whether present policy will be adequate todeal with emerging needs.

Certainly, the focus of Federal policy sincepassage of the Airport and Airway DevelopmentAct of 1970, and continuing with the recentlyenacted AIP, has been on building and expandingairports. Some critics have argued that the biastoward capital-intensive solutions, with liberalFederal aid, has distorted the evolution of the air-port system. It has favored the costly, and per-haps self-defeating, approach of adding capacitywherever and whenever needed to accommodatedemand. But new capacity inevitably begets newdemand, which creates need for more capacity,and so on in an escalating spiral. Limitations onland available for airport expansion or buildingnew airports, steady encroachment of urban de-velopment around airports, and community op-position to airport noise make adding capacity an

214 . Airport System Development

Figure 24.—Distribution of Airport Aid FundsUnder ADAP and AIP

Airport Development Aid Program(ADAP)

Historical(fiscal year 1971-80)

lmuters a

Iing

Airport Improvement Program(AIP)

Projected(fiscal year 1983-87)

Planning

increasingly expensive and difficult solution. Thealternative urged by critics of present policy is toencourage demand-management techniques thatwould promote fuller and more efficient use ofthe infrastructure already in place. These criticswould redirect policy away from large capitalprojects and toward a combination of managerial,operational, and market-oriented approaches tochannel new growth to fit within the ample ca-pacity now available in the airport system as awhole.

Another criticism of past and present policy isthat it has concentrated almost exclusively on air-side capacity-runways, taxiways, and other suchairfield facilities. Most FAA studies of capacityhave limited their concern to aircraft delay (oreven more narrowly, air carrier delay), and thecalculation of benefits has been confined largelyto air carrier fuel and labor savings and more ef-ficient aircraft utilization. In part, this may be amethodological limitation. It is considerably moresimple and straightforward to calculate aircraftdelay costs than to quantify the intangibles of ter-minal and landside delay —e.g., what is the eco-nomic value of convenience or passenger time?On the other hand, FAA has traditionally inter-preted aviation policy in such a way that theagency’s interest is closely circumscribed aboutthe airfield and aircraft operations, leaving re-sponsibility for other parts of the airport to thesite manager or to other agencies of government.

Delays in terminals and on landside accessroads are widespread and probably account formore of the increase in passenger travel time thandelays in aircraft departures and arrivals. By con-centrating on expanding the airside, the FederalGovernment has placed on airports almost thewhole burden of keeping pace with terminal andlandside improvements. A broader targeting ofFederal funds, it is argued, will be needed to dealwith all forms of delay associated with air trans-portation. An extension of this argument is thatFederal policy should broaden its sphere of con-cern to encompass the airport as part of the over-all urban or regional transportation system. In-deed, the new AIP legislation charges FAA withresponsibility to develop a National Plan of In-

Ch. 10—Policy Considerations ● 215

tegrated Airport Systems, which implies not onlyintegration of planning and development for allairports within a region or the Nation but alsointegration with other modes of transportation.

Another way in which Federal policy-or atleast FAA interpretation of Federal policy-hasbeen faulted is that it has led to an overly broaddefinition of what constitutes airports of nationalimportance. The last edition of the National Air-port System Plan contains 3,159 airports that areeligible for Federal aid. Preliminary indicationsare that the new National Plan of Integrated Air-port Systems now being prepared by FAA willcontain even more—3,203 as of the beginning of1984 and 3,639 by 1995. Most of these airportsare small general aviation facilities serving onlya relatively few aircraft. While there is a distinc-tion between eligibility for Federal aid and actualreceipt, the existence of a trust fund and a Fed-eral policy that seeks to spread aid broadly to allclasses of airports has created a very large rosterof airports competing for a share of Federal moneys,with each believing that it can and should receivesupport for capital projects. At the national level,this leads to inflated estimates of “needs,” whichexert pressure for more and more Federal outlaysin a continuing program of airport building andexpansion. A more restrictive definition of theFederal Government’s interest may be necessaryto clarify the distinction between those airportsthat serve a nationwide air transportation func-tion and those that serve purely local and special-ized needs that are national only in an aggregatesense.

A somewhat different criticism that is partiallycontradictory to the argument above is that Fed-eral aid has favored air carrier airports whileneglecting the needs of other users of the airspace,chiefly those who frequent GA and reliever air-ports. To some extent, the provisions in AIP toincrease that share allocated to general aviationare a response to this criticism. However, thisargument is not simply a plea for more aid to gen-eral aviation. Rather, it is directed to the largerissue of financial self-sufficiency. Some contendthat Federal aid should be targeted toward thoseairports that do not have adequate revenues oraccess to debt capital in the private market. Thelargest airports, which collectively serve almost

Photo credit: Los Angeles Department of Airports

Mines Field, L.A. Municipal Airport in 1929

90 percent of air travelers, are, or could be, vir-tually self-supporting. 7 If so, these critics main-tain, it is not an appropriate use of Federal moneys(even perhaps moneys from a dedicated trustfund) to help those that can help themselves. Thisis the argument of those who would defederalizelarge and medium airports, and it has found fa-vor both among small airport operators (who seeit as an opportunity to obtain more Federal aid)and those who seek market-oriented solutions thatwould reduce the Federal budget.8

The defederalization argument, however, alsoembraces a more fundamental economic concern—economically efficient pricing of airport facil-ities and services. Economists contend that Fed-eral policy which supports capital improvementsby grants from a trust fund and which is pre-dicated on unrestricted airport access for all userson demand, when coupled with local airport prac-tice of residual-cost pricing as a method of set-ting landing fees, encourages supply-oriented solu-tions to congestion and delay. The alternativefavored by economists is pricing the use of air-port facilities according to the marginal cost that

25-420 0 - 84 - 15

216 ● Airport System Development

such use imposes on the airport operator and onothers who seek to use the airport at the sametime. At the local level, this implies airport usefees based on the cost incurred to provide a givenamount of capacity. At the national level, the im-plication is twofold: 1) Federal aid should be givenonly to the extent that local resources are insuffi-cient and that it is in the national interest to pro-vide, and 2) local airport authorities should begiven the freedom to impose user fees that are con-sonant with market forces. Thus, they wouldargue that Federal policy-explicitly by the “first-come, first-served” principle and by prohibitionof facility user charges (head taxes) and implic-itly by its silence on the question of efficient pric-ing as a means to increase airport revenue—distorts the market in the direction of unneces-sary Federal subsidy and capital-intensive ap-proaches to increase supply rather than modulatedemand.

This brief critique of past and present Federalpolicy points to a basic issue. In promoting avia-tion by providing abundant capacity at low costto airport and airspace users, has the FederalGovernment in effect subsidized airlines, generalaviation, aircraft manufacturers, and local devel-opment? The evidence suggests that the answeris yes. But the more important question is motive,not effect. In the earliest days of aviation, the aimof Federal policy seems to have been to foster a

fledgling industry for reasons of national defenseand development of an economically valuablenew mode of transportation. Without this sup-port, aviation might have lagged or witheredaltogether. In the years after World War II, therationale of civil aviation as a buttress of nationaldefense became less important, and considerationsof the national economy and regional develop-ment came to predominate. They still do. Aircraftmanufacturing and the aviation industry are im-portant contributors to the balance of trade.Available, efficient, and low-cost air travel stim-ulates all sectors of the economy. An airport isan important economic resource to a community,both in and of itself and because it can be usedto leverage additional highly desirable develop-ment. In this sense, aviation is a general boon tothe economy, and it can be argued that the Fed-eral Government’s policy is amply justified.

On the other hand, aviation is no longer im-mature, underdeveloped, and struggling. Despitevicissitudes that affect it along with the rest of theeconomy, aviation is a robust industry that is ca-pable of supporting itself. Is, therefore, a strongFederal presence still required? Perhaps yes, per-haps no. But it is certainly not inappropriate toreexamine the nature of the social and economiccontract between the Government and the avia-tion communitybe better served

ALTERNATIVE FEDERAL AIRPORT

to see if mutualin other ways.

POLICIES

interests could

While there are many aspects of Federal pol-icy that affect airport system development, thereis perhaps none so powerful as that pertaining tofunding of capital improvements or expansion ofairport facilities. The policy options considered ●

here therefore concentrate on the rationale of theFederal funding program and the amount of cap-ital aid to be provided. Four policy alternativesare presented:9

● Defederalization— withdrawal of Federal aidfor those airports capable of self-support(essentially all large airports and most me- ●

‘The first three of these policy alternatives are also examined byCBO in Financing U.S. Airports in the 1980s, April 1984.

dium airports) in the expectation that theywill be able to finance their own capital im-provements through retained earnings andissue of revenue bonds.Selective Federal Aid—based on a more re-strictive definition of Federal interest in air-port development, aid only to those airportsthat provide commercial air service and toa selected set of GA airports whose functionis to relieve congestion at commercial service airports in major metropolitan areas.No Federal Aid—return to the “dock” pol-icy, under which Federal interest in civil avia-tion would be limited to airways, naviga-tional aids, air traffic control, and safety andno Federal aid would be provided for airport

Ch. 10—Policy Considerations . 217

development on the grounds that such facil-ities should be built and maintained by themunicipalities whose economic interests theyserve.

● State Administration—transfer to State gov-ernments of responsibility y for administeringa federally funded airport aid program com-posed of formula grants to commercial serv-ice airports based on passenger enplanementsand block grants to be distributed on a discre-tionary basis by State aviation agencies.

In advancing these options, OTA does not con-tend that present policy is unsatisfactory or thatit would be an inappropriate course for futureyears. The present Airport Improvement Pro-gram, tempered by the previous 10 years of ex-perience with ADAP, seeks to provide a balancedand sufficient program of aid that is consistentwith the approach to fostering civil aviation thathas prevailed since the 1960s. However, as theforegoing policy assessment has brought out, thereare some fundamental questions that are worthreexamining.

The rationale of the options presented here isthat, if it is desired to redirect Federal airport pol-icy, there are three basic avenues that might betaken. The first, embodied in the defederalizationoption, is that the primary test to be applied inthe distribution of aid to airports is financial self-sufficiency. The second line of departure frompresent policy is that a more restrictive definitionof Federal interest could be applied. Two optionsof this sort are considered: selective aid only tothose airports that serve to make up a nationalair transportation network and-more restrictivestill—aid for navigation and air traffic control butnot to airports themselves. The third shift of pol-icy, State administration, would not affect theamount and type of airport aid afforded undercurrent policy, but it would place responsibilityfor distribution of this aid in the hands of Stateand local agencies instead of the Federal bureauc-racy. None of these options would change thepresent method of support for ATC system mod-ernization or for funding FAA operational andmaintenance activities. FAA’s regulatory andsafety functions related to airport operation wouldlikewise be unaffected.

It should be noted that, while these options arediscussed as though they were independent andmutually exclusive choices, this is simply an ana-lytical convenience. A revised Federal airport pol-icy might well combine features of two or moreof these options, either in the interest of address-ing several perceived shortcomings of present pol-icy or in an attempt to mitigate adverse impactsthat might result from adoption of any one op-tion in pure form.

It should also be noted that not all of the con-cerns about the adequacy of the airport systemvoiced in this report are explicitly addressed inthe policy options. For example, the need for andapplication of new technology to alleviate airportcongestion or to reduce delay do not specificallymotivate any of the policy choices. It is assumedthat needed technological improvements or pro-cedural changes in air traffic control would bemade under all options, whether by FAA or bylocal airport authorities. However, since the rateof adoption might be influenced by the availabilityof funds and the priorities of the agency respon-sible for financing, the effect of funding policy onthe adequacy of the airport system is consideredas a possible impact in the discussion of eachoption.

Similarly, the issue of noise is not addressed inany of the policy options. The responsibility andliability of various parties in protecting commu-nities from the adverse effects of airport noise isan important question—perhaps the thorniest fac-ing civil aviation today—but its resolution lieslargely outside the realm of topics treated in thisreport. It is a legal issue that will turn mainly onwhat the courts determine to be the joint and sev-eral responsibilities of airport operators, airspaceusers, and Federal, State, and local governmentsin dealing with the problem.

Finally, the matter of local airport managerialpractice and pricing policy is not a direct concernshaping any of the policy choices, although somemight lead to more economically efficient pric-ing of airport services. Chapters 2, 5, and 6 havedealt with the importance of the contracts andworking arrangements between airport managersand and airport users, with the effects of differentapproaches to pricing the use of facilities, and with

218 Airport System D e v e l o p m e n t— —

the general issue of economic approaches to man-aging demand for airport services. These arethought by OTA to be matters of local policy thatlie somewhat outside the focus of Federal concern,although it is recognized that the Federal Govern-ment has a responsibility to assure that enterprisesreceiving grants are properly managed. The ex-tent to which Federal policy on financial aid oron administration of the airport aid programmight affect local management, pricing, and fi-nancing mechanisms is treated as one of the pos-sible effects of each option.

Funding Under Current Policy

In the 5 years from 1978 to 1982, funds fromall sources invested in airport improvements aver-aged $1.8 billion annually. Of this, about $1 bil-lion was raised through bond sales, mainly reve-nue bonds issued by large and medium airports.Federal grants for airports of all sizes amountedto slightly less than $0.6 billion per year, withState aid making up the remainder (table 53).

While the Federal Government contributedabout one-third of the total invested, the sharevaried considerably in relation to airport size. Forlarge airports, the Federal contribution typicallymade up a little over 15 percent of all investment;for medium airports, about 25 percent. At smallcommercial airports, Federal funds made up two-thirds. For GA airports, Federal money was typi-cally 90 percent or more of all investment. In gen-eral, the degree of Federal participation in capi-

Table 53.—Sources of Airport investment Funds,1978-82 (millions, 1982 dollars)

PercentBond Federal Federal

Airport category sales aid aid

Large a . . . . . . . . . . . . . . . . . . . . .$ 689 $144 17Medium a. . . . . . . . . . . . . . . . . . . 224 75 25O t h e r c o m m e r c i a l s e r v i c ea . . . 93 164 66Reliever . . . . . . . . . . . . . . . . . . . 8 63 89General aviation . . . . . . . . . . . . 6 104 95

tal projects reflected the earning power and bor-rowing capacity of the airports receiving grants.

Table 54 is an estimate of future demand forairport investment capital over the 10-year period1984-93. Large and medium airports, which han-dle about 90 percent of passenger traffic, accountfor the bulk of the anticipated investment—$650million to $1 billion annually, or roughly the samelevel as in recent years. An additional investmentof $400 million to $450 million is expected at smallcommercial airports. The demand for capital byreliever and GA facilities is estimated to run be-tween $500 million and $600 million annually.l”

Also presented in table 54 are currently author-ized annual outlays under AIP and estimates ofbond sales that could be expected if historic bor-rowing patterns were to continue. It appears thatthis combination of public and private financing(which is roughly the same as that over the pastfew years) would be adequate to cover the pro-jected investments for airports as a whole, butwith considerable variation by airport size andclass.

In general, these figures suggest that currentpolicy and the funding level authorized in AIP

Tabie 54.—Projected Airport Capitai Needs andSources of Funds (millions, 1982 dollars)

Large d. . . . . . . . . . . . . &50-$6&l $260 $ 669Medium d. . . . . . . . . . . 200-350 80 224Other commercial

service d . . . . . . . . . 400-450 85 93Reliever . . . . . . . . . . . 100-150 60 8General aviation . . . . 400-450 95 6Other federal aide . . . — 160 –

Ch. 10—Policy Considerations ● 219

Table 55.–Federal Airport Aid (Defederaiization Poiicy)

Average annual expenditures (1985-89)

Number of (millions of 1982 dollars

Airport category airports Present policya Defederalization b

Large c. . . . . . . . . . . . . . . . . . . . . . . . 24 280 —Medium c . . . . . . . . . . . . . . . . . . . . . 47 80 —Other commercial servicec . . . . . . 489 85 120Reliever . . . . . . . . . . . . . . . . . . . . . . 219 80 115General aviation . . . . . . . . . . . . . . . 2,424 95 130Other Federal aid . . . . . . . . . . . . . . — 180d 75C

SOURCE: Office of Technology Assessment

220 ● Airport System Development

current policy. It is more likely, however, theseairports would attempt to replace lost Federalfunds through larger or more frequent bond sales.While it is difficult to determine how much morethe airports would seek to raise, it could be anadditional $100 million to $200 million annually.

Defederalized airports might find that the costof borrowing money would increase for two rea-sons. First, they would be competing more vig-orously for larger sums of money. Second, theywould have lost the more or less guaranteed in-fusion of Federal funds and might therefore ap-pear to investors as more risky investments. How-ever, in light of airports’ strong financial positionand blemish-free record in the bond market, it isunlikely that their ability to raise capital wouldbe greatly affected.

Smaller commercial service airports, whichhave annual capital needs of about $400 millionto $450 million, could be expected to raise about$90 million from bond sales (judging from theirperformance in 1978-82) and might receive up to$120 million in Federal grants, depending on howdiscretionary funds are allocated. This wouldleave an unfunded need of between roughly $200million and $250 million. It is assumed that GAand reliever airports would receive the same aidas under present policy, plus perhaps as much asan additional $70 million in discretionary moneys.These airports might be the biggest gainers froma defederalization policy.

Effects on Airport Users

Defederalization would make large and mediumairports more dependent on revenue-bond financ-ing. One source of income commonly used toguarantee payment of these bonds is airport usefees charged the airlines. Thus, one effect ofdefederalization might be to change the balanceof power between airlines and airport manage-ment in decisions on capital investment. At abouthalf of the large and medium airports, airlinesnow exercise control of investments throughmajority-in-interest clauses and other features ofairport-airline use agreements, and airport oper-ators have often found that Federal grants werealmost the only funds that they could use for proj-ects which the airlines were unwilling to support.

Ch. 10—Policy Considerations ● 221

If Federal moneys were unavailable, airport oper-ators might have considerably less latitude inmanaging their capital budgets. On the otherhand, defederalization could encourage airportmanagers to discontinue or weaken majority-in-interest clauses when airline use agreements comeup for renewal. It is difficult at this point to assesswhich way the balance would shift.

If operators of large and medium airports wereto offset the loss of Federal funds by increasinguser charges, the general effect of deregulation onusers of those airports would be higher fees forlanding, leasing of space, and airport services. Allclasses of users—business aviation, GA, and air-lines—might find it more expensive to operate atdefederalized airports. For airlines, much of thisexpense would be passed on to passengers in theform of higher fares.

Some proponents of defederalization argue thatdefederalized airports should be given the powerto levy a passenger facility charge (PFC) or headtax in order to supplement their present revenues.Even if permitted, many airports might not chooseto institute a head tax. Others, however, insistthat some such mechanism for raising additionalfunds is necessary if they are to give up Federalassistance. If head taxes were widely adopted, air-line passengers would face a second form of in-creased travel cost.

Serious questions have been raised about thefeasibility and advisability of implementing localpassenger facility charges .14 Four issues are of par-ticular concern:

●

●

●

●

How and by whom should fees be collectedand how could the confusion caused by dif-ferent rates at different airports be avoidedor managed?Should diversion of head tax revenues tononairport uses be prevented?How can head taxes be instituted in the faceof such obstacles as long-term use agreementsthat prohibit the establishment of new fees?What can be done about airports where thehead tax may not be feasible?

. ——- —

222 ● Airport System Development

not been the custom in the United States to di-vert aviation taxes to nonaviation uses, and someregard the practice as improper. It was, in fact,the problem of diversion that caused the FederalGovernment to forbid airports to impose headtaxes in 1973. The problem might be solved byFederal legislation requiring that passenger facil-ity charges reflect actual costs and that proceedsbe used only for airport purposes.

A few airports have introduced clauses in newlynegotiated use agreements that specifically pro-tect management’s right to levy a head tax in theevent that such charges become legally permissi-ble. However, Airport Operators Council Inter-national estimates that at least 20 of the top 70

airports could not impose a PFC because of theirexisting use agreements. Federal legislation couldoverride these agreements.

Even if the Federal Government grants them theauthority, airport operators will have to decidefor themselves whether the head tax option is arealistic alternative for financing airport develop-ment. Managers of several major airports havestated publicly that they would not impose a PFCeven if it were allowed. For those unable or un-willing to use head taxes, the most likely alterna-tive would be to increase landing fees and con-cession rents.

If all large and medium airports were defed-eralized, and all elected to replace all lost Federalaid with PFCS, the cost of the average airline ticketwould increase by about $1.50. Since the aver-age ticket now costs about $100, this would notraise the price of air travel appreciably. If the Fed-eral Government were to reduce the present 8-percent passenger ticket tax by 1 percentage point,the added cost of head taxes would be largelyoffset.

Effects on Airport System

The defederalization policy could have an ef-fect on demand at large and medium airports.Higher landing fees charged to raise additionalrevenue might discourage use of these airports bygeneral and business aviation. If so, there couldbe some decrease in congestion and delay, but theeffect would be highly localized and it is difficult

t

to gauge what the implication might be for theairport system as a whole.

Because of the unavailability of supplementaryFederal aid, additional funds for improvementsat large and medium airports would have to beraised privately. The need to rely entirely on debtfinancing might cause airport operators to defersome projects or to scale them down to essentials.Overall, defederalization could increase the likeli-hood that only those investments which are trulyneeded and economically justified would beundertaken. The type of investments most likelyto be eliminated or drastically reduced would bethose that do not generate revenue or provide di-rect financial benefit to airport users.

Selective Federal Aid

A criticism of present airport funding policy—at least as reflected in the criteria applied by FAAin formulating the National Airport System Plan(NASP),—is that the Federal interest is drawn toobroadly and unselectively. At one extreme, aboutthree-quarters of all Federal aid under ADAP wentto air carrier airports—many of which appear tobe capable of financing investments from airportrevenues and borrowing in the private moneymarket. AIP reduces this share to half, but thisamount may still be high.

Ch. 10—Policy Considerations 223

At the other extreme, Federal aid is accordedto many small GA airports that do not serve anational transportation function—at least if thisfunction is defined as contributing directly to com-mercial air travel. The grants that such airportsreceive are typically small—most are under $200,000and many are $50,000 or less. In the aggregate,they were about 12 to 15 percent of all Federalaid under ADAP and would continue at this levelunder AIP. 17 The criteria for eligibility applied toGA airports are such that virtually any publiclyowned aviation facility in the United States couldexpect to receive Federal aid.18 Many are verysmall, serving a dozen or so based aircraft thatare used either for instruction, aerial work, pri-vate business purposes, or recreational flying. Asa rough estimate, these 2,424 GA airports prob-ably serve less than half of the private and busi-ness aircraft in this country .19

The rationale of the selective aid policy is thatmuch more stringent criteria of eligibility shouldbe applied to airports receiving Federal assistance.Two tests would be applied: 1) Is the airport in-capable of obtaining adequate investment capi-tal through its own means? and 2) Does the air-port contribute to a national system of commercialair transportation? By these standards, only the560 commercial service airports20 and the 219 GAairports designated as relievers would receive cap-ital aid, and only to the extent that they wereunable to finance investments from their ownresources. In effect, the Federal Government,through the Airport and Airway Trust Fund,would become either the lender of last resort oran outright grantor in those cases where repay-

ment seemed impractical and it was in the publicinterest to sustain the facility as part of the airtransportation network. Airports not meetingthese criteria (virtually all the 2,424 GA airportsin the NASP today) would not be eligible for Fed-eral grants, and it would become the responsibilityof State and local governments and the users ofthese airports to provide capital funds. The fundsnow earmarked in AIP for noise projects and air-port planning grants to States ($64 million and$8 million per year, respectively) could still bemade available for airports of any size or purpose.

In a sense, the selective aid policy would createfor airports an analog of the present highway sys-tem, with a Federal component (airports of na-tional interest akin to the Interstate Highway Sys-tem) and a State and local component (smallerairports serving local needs as do State, county,and city roads). The Federal interest would be cen-tered on those airports deemed essential to in-terstate transportation; State and local interestswould be similarly defined. While this distinctionis not clear-cut, neither is it in the highway sys-tem, and yet it serves as a workable way to dif-ferentiate Federal, State, and local responsibilities.Unlike the highway system, however, there wouldstill be a very large number of privately ownedairports (over 10,000), about 20 percent of whichare open to public use.

Effects on the Federal Budget

This more restricted definition of the Federalrole in airport development would considerablyreduce the annual expenditures under AIP in 1983-87. Even if the full $108 million in discretionaryfunds were to be added to the amount that smallcommercial service and reliever airports now re-ceive under present policy and if noise and plan-ning grants were unchanged, aid would amountto $345 million per year, slightly over 40 percentof the presently authorized level (table 56). Smallcommercial service airports would receive about$140 million per year (the $85 million authorizedin AIP for this purpose plus perhaps half of the$108 million now earmarked for discretionarygrants). Relievers could receive as much as $130million annualIy (the $80 million or so now avail-able under AIP and up to $50 million of discre-tionary funds). Noise and planning grants would

224 Airport System Development

Table 56.–Federal Airport Aid (Selective Aid Policy)

Average annual expenditures (1985-89)(millions, 1982 dollars)

Airport category Number of airports Present policya Selective aidb Defederalization b

Large c . . . . . . . . . . . . . . . . . . . . . . . . . . 24 280Medium c . . . . . . . . . . . . . . . . . . . . . . . .

— —47 80

Other commercial servicec . . . . . . . .— —

489 85 140 120Reliever . . . . . . . . . . . . . . . . . . . . . . . . . 219 80 130 115General aviation. . . . . . . . . . . . . . . . . . 2,424 95 — 130Other Federal aid . . . . . . . . . . . . . . . . — 180d 75e 75e

presumably remain at the levels presently au-thorized.

There would be a substantially increased bur-den on State and local governments, who wouldfind themselves pressured to pickup roughly $95million per year in GA airport funding that wouldno longer be available from the Federal Gover-nment. In partial recompense, however, the addi-tional $55 million in Federal aid for small com-mercial service airports available under this policymight diminish the need for State outlays in thisarea.

Further relief to the States might still be neces-sary, and one way to accomplish this would beto turn back some portion of Trust Fund revenuesto the States, at least on an interim basis, to easetheir transition to greater funding responsibilities.Another way would be to transform some of theFederal taxes on aviation into State taxes. Theaviation fuel tax is such a possibility. The Fed-eral taxes now levied on aviation gasoline and jetfuel are expected to bring in an average of about$150 million annually through 1987. A one-thirdreduction in these taxes at the Federal level, witha corresponding increase in State levies wouldprovide about $50 million more to the States thatcould be used for airports no longer receiving Fed-eral support. The impact of this action on theTrust Fund would be negligible. It would reduceTrust Fund revenues by about 1.5 percent.21

Effects on Airport Financing

For large and medium airports, the effects ofa selective aid policy would be the same as under .a defederalization policy. Large and medium air-ports no longer eligible for Federal aid would berequired to finance capital improvements througha combination of operating revenues and borrow-ing from private sources. Also as in the case ofdefederalization, the selective aid policy wouldnot entirely eliminate Federal funds for large andmedium airports. If it is assumed that about $65million to $70 million per year would still be setaside for noise-related projects, a substantial sharewould probably go to large and medium airportsas it does now under current policy.

Small commercial service and reliever airportscould find their financial situation somewhateased. If the present $108 million in discretionaryfunds were added to the grants they now receive,a larger amount of Federal aid would be avail-able to these airports under selective aid thanunder either present policy or the defederalizationoption. If discretionary funds were split evenly,commercial service airports would find the $85million now accorded them under present policyincreased to as much as $140 million under selec-tive aid.

Small commercial service and reliever airportsmight also be in a better position to raise morecapital on their own by virtue of their inclusionin a more selectively defined Federal airport sys-tem. This action by the Federal Government,

Ch. 10—Policy Considerations 225

which could be interpreted as a commitment ofcontinued support, might enhance the credit-worthiness of these airports in the eyes of poten-tial investors in bond issues.

General aviation airports excluded from theFederal system under the selective aid policywould have to turn to other sources of capital.Since they are for the most part publicly owned,their first resort would be to their parent munici-pal or county government and then to their State.If aid could not be obtained from these sources(and perhaps even if it were), GA airports wouldhave to turn to their users to cover some portionof capital investments. Higher landing fees, tie-down charges, and hangar rentals would be themost probable course, both to generate neededcapital and to demonstrate to public or privateparties that the airport operator is making a besteffort to be self-supporting.

In most circumstances, the operator of a GAairport would probably face higher than averageborrowing costs. In fact, debt financing wouldprobably be feasible only for the larger GA air-ports, those with a sufficient number of based air-craft and a high enough level of operations toassure investors that debt could be serviced fromrevenues. Revenue-bond financing for smaller GAairports would be difficult, and for the verysmallest virtually impossible. For such airports,the most likely recourse would be financing throughgeneral obligation bonds issued by the munici-pality or State.

One way to provide assistance to marginallyprofitable GA airports would be to establish aFederal revolving fund, which would make capi-tal improvement loans available at low interest,or no interest. Some States (e.g., Idaho, Min-nesota, and Nebraska) now have such revolvingfunds for special purposes such as installation oflighting and navigation aids or hangar construc-tion. Setting up a revolving fund at the Federallevel would entail a one-time appropriation (per-haps from the current Trust Fund surplus). There-after, it would operate at little or no cost to theFederal Government or to Trust Fund contributorsexcept for administrative expense and forgone in-terest (if money were loaned below the prevail-ing market rate).

Effects on Airport Users

For major, national, and larger commuter air-lines, the effects of the selective aid policy wouldbe like those of defederalization, at least for theiractivities at large and medium airports. Landingfees and other use charges at these airports wouldprobably rise as managers sought to generate newrevenue to offset the loss of Federal funding. Insome cases, airlines with a majority in interest atthese airports might seek a stronger voice in in-vestment decisions since they would be asked tounderwrite a greater share of capital improve-ments, either directly through participation in thefinancing or indirectly through higher airport usefees. Small commuter airlines serving a large ormedium airport might find it harder to protecttheir interests since they would generate relativelylittle revenue for the airport (even though pay-ing higher use fees) and thus could not exert muchinfluence on decisions related to investment or ac-cess to facilities. In contrast, commuter airlineswould probably find their situation at smallercommercial service airports somewhat improved.The increased amount of Federal funding avail-able for these airports would, over time, raise thequality of facilities and services at these sites, butprobably not the cost paid by users in the formof landing fees or rents.

Business and corporate aircraft operators wouldalmost certainly encounter higher use fees at air-ports not receiving Federal funds-either the largeand medium airports expected to be self-support-ing or the GA airports excluded from the Federalsystem. This would be an incentive for businessand corporate aircraft to use reliever airports—which are precisely for this purpose-but it could,in turn, cause pressure on reliever airport opera-tors to upgrade their facilities to be more nearlyon a par with commercial service airports.

Thus, a somewhat unexpected result of theselective aid policy could be a more marked dif-ferentiation among airports and types of users—with air carriers predominating at large and me-dium commercial service airports and businessaviation gravitating to relievers in major metro-politan areas. This stratification might also leadto each class of user paying a share of cost closerto that which they actually impose on their air-ports of choice.

226 . Airport System Development

The other major segment of general aviation—those who operate light aircraft for personal orrecreational purposes—would also be likely to in-cur higher airport use costs under this policy. At“off-system” GA airports, they would have to paymore in order to support these facilities or losethem. This might cause some GA operators togravitate to nearby relievers or medium and smallcommercial service airports with capacity to ac-commodate them. But even at many of these air-ports, user charges might be higher than they aretoday. Since this segment of general aviation isquite sensitive to factors of cost and convenience,the longer term result might be a dampening ofpersonal GA. This type of flying probably wouldnot diminish absolutely (unless the costs increaseddrastically), but the rate of growth might besubstantially slower than it has been in the past20 years.

Effects on the Airport System

The primary effect of the selective aid policyon the airport system would be to create a morecoherently organized system—due in part to aclearer delineation of the Federal interest and amore tightly focused program of support for pub-lic air transportation. The airports receiving fed-erally administered funds would be those servingvirtually all airline passengers and air cargo move-ment and those private parties with a strong busi-ness or personal interest in operating aircraft.Discretionary use of airports and airways wouldnot be discouraged, but it would be channeled toa “second-tier” network of GA airports. The ade-quacy and health of the GA airport networkwould be determined largely by the willingnessof discretionary flyers to pay the costs of main-taining and operating facilities provided for theiruse.

From the combination of more narrowly tar-geted Federal support, user fees more in line withthe cost of providing service, and stratificationof airport use by type of aircraft might come cer-tain operational benefits. To the extent that thetraffic mix became more homogeneous—especiallyat large and medium airports-delays due to thedisparity of aircraft performance characteristicswould be reduced.. Adjustment of user fees, ifprompted by the motive of recovering cost in pro-

portion to the burden imposed on the airport toprovide the type and amount of service demanded,might also help to relieve congestion in severalways. They could provide capital needed for newfacilities; they could serve to redistribute demandto offpeak periods; and they could induce diver-sion of some users to reliever airports or alterna-tive, less congested sites.

The chief negative impact of this policy is itspotential effect on general aviation, particularlythe portion using airports that would be excludedfrom the Federal system. The financial conditionof many of these airports is weak today, and theymight become weaker without Federal support.The loss of adequate and convenient landing sitesor the higher cost of using GA facilities could con-strain the growth of personal and recreational fly-ing. On the other hand, some of the past growthof this sector has been inspired by Federal pro-grams which provided up to 90 percent of the cap-ital investment at GA airports. To this extent, gen-eral aviation is a product of a Federal policy thathas subsidized the ownership and operation of air-craft for private purposes. If GA operators proveunwilling to bear a greater share of the costs atthe airports they patronize, it may be an indica-tion that their demand for facilities is more in-duced than real.

No Federal Aid

This option represents a returnpolicy that prevailed in the years

to the “dock”before World

War II. It postulates that airport owners, prin-cipally municipalities or States, would assume fullresponsibility for capital improvement of airports.The Federal Government would provide no grantfunds for this purpose and would concern itselfonly with support of air navigation—airways andair traffic control, including installation and main-tenance of control towers and landing aids atairports.

As described earlier in this chapter, present Fed-eral policy on airport development has evolvedgradually over the past 40 years. The original Fed-eral view was that airports, like water ports,should be matters of local concern. Municipalitieswere expected to build and maintain port or air-port facilities because these investments yielded

Ch. 10—Policy Considerations ● 227—

primarily local or regional economic benefits. TheFederal role was to maintain the waterways andairways and to provide navigation systems, there-by serving the national interest of facilitating in-terstate commerce and contributing indirectly tothe well-being of communities linked by the water-way or airway systems.

A return to the dock policy is by no means asuggestion that the current and past policies ofdirectly aiding airports have been a mistake. Di-rect Federal support has been crucially importantto the development of the national airport sys-tem. The national defense considerations duringWorld War II and the need for airport modern-ization at the beginning of the jet era were press-ing problems at the time. In retrospect, the deci-sions to provide Federal funds for airport de-velopment constituted sound public policy for

that time since they served the long-term Federalinterest of fostering and encouraging the grow-ing air commerce and aircraft manufacturing in-dustries.

It is possible, however, that the goals of theseFederal programs have been achieved. An exten-sive, modern airport infrastructure is now inplace. The aircraft manufacturing industry hasmatured. Public transportation by air is no longera fledgling industry—it has been the dominantmode of long-distance travel for many years. Ifthe goals of the program of Federal assistance toairports have been achieved, then it might beargued that the program should be terminated andthat outlays from the Airport and Airway TrustFund should be limited to those needed for mod-ernization, operation, and maintenance of theATC system.

Photo credit: Federal Aviation Administration

Meeting of modes

25-420 0 - 84 - 16

228 ● Airport System Development

Effects on Federal Budget

This option would eliminate all Trust Fund ex-penditures for airports, which amounts to $800million per year under present policy. Aviationuser taxes could be reduced to the level necessaryto cover the capital and operating costs of the air-ways and ATC system. The passenger ticket tax,for example, could be reduced from 8 to 5.5percent.

Effects on Airport Financing

Airport sponsors would have the responsibilityof raising all funds needed for capital projects.Some improvements would be funded with re-tained earnings or moneys borrowed from privateinvestors through revenue bonds or other inden-tures. Airports might have to increase user feesto makeup for lost Federal funds. Some less effi-cient or low-traffic airports could have difficultyraising capital and might remain unimproved orclose altogether.

Another possible source of funding would beState or local authorities. Some States, for exam-ple, might elect to provide assistance to airportsunable to raise the capital needed for improve-ments. Local governments might choose to assisttheir airports as well. Airports provide manybenefits to the local economy: they provide jobsand attract industry to a region, in addition tolinking the community to the outside world. Tothe extent that a community wished to preservethese benefits, the local government might chooseto allocate local tax revenues to assist the airport,or it might use its general obligation bondingauthority to borrow funds for airport use. If thecommunity were unwilling to provide assistance,this might be taken as an indication that the eco-nomic benefits of the airport were not worth thecost .

While the return of financing responsibility forairports to State and local government might posehard choices in some communities, it would notbe disastrous in the aggregate. The Federal shareof airport expenditures is $800 million per year,out of the total of $53.4 billion per year spent byFederal, State and local governments on major in-

frastructure programs. 22 Of this annual expendi-ture, about half (a little over $25 billion) is spentby States and localities. Even if States and mu-nicipalities assumed responsibility for the entire$800 million formerly provided in Federal grants,their annual capital expenditure would increaseby only about 3 percent. In fact, however, Stateand local governments would probably have toraise not over half this amount since, under cur-rent policy, approximately $400 million of Fed-eral outlays go to large and medium airportswhich appear capable of raising adequate capitalwithout local or State participation.

Effects on Airport Users

A basic effect of this policy might be to bringthe price of airport services more closely into linewith the cost of providing those services. Facedwith the need to generate investment capital, air-ports of all sizes would have to increase existinguser fees, or perhaps introduce new ones. Air car-riers and general aviation, as the primary benefi-ciaries of airport service would have to pay higherairport use fees, except perhaps in cases where thelocality chose to provide some sort of subsidy.With increased dependence on bond financing atair carrier airports, airlines might be expected tounderwrite a larger share of airport costs.

Effects on Airport System

This policy—like the selective aid policy de-scribed earlier—might also lead to a two-tier air-port system composed of roughly 500 commer-cial service and 200 reliever airports supported bya mixture of private funding and State and localaid and 2,000 to 3,000 GA facilities that wouldhave to rely on the patronage of private ownersof based and itinerant aircraft. Some communi-ties might choose to support such GA airports asa matter of local pride or as a spur to local eco-nomic development. Those airports not receiv-

Ch. 10—Policy Considerations ● 229

ing community support might face great difficultysurviving on user fees and rents alone, whichmight be an indication of their marginal economicvalue to civil aviation.

Because it would create a situation where air-ports might have to compete on the basis of price,this policy could also lead to a “free market” inairports, with cities vying for business and usersshopping for the best price and service. Airportshave already begun to compete for air carrier serv-ice since airline deregulation, and the end of Fed-eral funding for airports might lead to an inten-sification of this trend.

The effects of this policy would probably varygreatly by region. The greatest possibility of neg-ative impact would be in sparsely populated States,where there is not a sufficient base of aviationactivity to support many low-volume airports.

State Administration

The essential feature of this policy is that itwould change the way in which the airport fund-ing program is administered. It differs from pres-ent policy in that responsibility for distributionof Trust Fund moneys and for management ofgrant applications and awards would be trans-ferred from the national to the State level. Stateaviation agencies or departments of transporta-tion would, in effect, replace FAA as the admin-istrator of airport aid.

The Federal Government would not need to di-vorce itself entirely from airport capital assistance.For reasons of efficiency and national uniform-ity, the Federal Government could continue to col-lect the present taxes that support the Airport andAirway Trust Fund, and the congressional proc-ess of authorization and appropriation of TrustFund outlays for airports would remain unchanged.However, administration of grants and exerciseof discretionary authority in distributing that partof the Trust Fund now allotted to airports wouldno longer be carried out by a central Federalagency. Instead, these responsibilities would de-volve to the States, much as they now do in theadministration of the Highway Trust Fund.

There are several ways to implement such a pol-icy, and that outlined here is intended only as an

illustration of the concept, not a specific formu-lation of how a State-administered program shouldwork. In spirit, this policy is an application ofNew Federalism, a concept whose stated purposeis to “restore the balance of responsibilities withinthe Federal system and to reduce decision, man-agement, and fiscal overload on the Federal Gov-ernment .“23 Simply stated, it would place greaterauthority at the State level for decisionmaking onthe delivery of capital funds. This policy optionis prompted by three criticisms of the way inwhich the Federal airport program is now ad-ministered. First, the present program is encum-bered by a growing number of categorical grants,conditions, and regulations. Second, a central Fed-eral bureaucracy is not always responsive to localneeds and circumstances; and the interests of aidrecipients might be better served by State govern-ments, which are closer to these concerns, moreaccessible, and capable of acting more promptly.Third, the present division of responsibility be-tween Federal and State agencies results in nei-ther being able to deal with airport planning, de-velopment, and funding problems as a whole.

In the illustrative example presented here, TrustFund outlays for airports would remain at thelevel now authorized under AIP—an average of$800 million per year. Half of this sum would bedistributed directly to individual commercial serv-ice airports as pass-through grants based on pas-senger enplanements. The other half would be dis-tributed to the States in the form of block grantsbased on various indicators of aviation activity(number of airports, aircraft registrations, fuelsold, area, population, and the like). State avia-tion agencies or transportation departments wouldhave full discretionary authority to allocate thishalf of Trust Fund outlays among airports in theState.

The Federal Government might choose to re-tain some authority to set capability standards forState agencies and to draw guidelines for theStates in determining eligibility for award, pur-pose of expenditure, and degree of local partici-pation; but this is not an essential feature of the

230 . Airport System Development

policy. The Federal Government would retain allfunctions related to safety, operational proce-dures, and airport certification. All ATC facilities(including those at airports) would continue to beinstalled and operated by FW.

Effects on the Federal Budget

This policy option would have no effect on theFederal budget since it would amount to a trans-fer (or revenue turnback) of Trust Fund tax rev-enues to the States. It would result in no finan-cial gain or loss either at the Federal level or forthe States individually and collectively.

Since Congress would still exercise control overTrust Fund outlays through its authorization andappropriation powers, the amount could be ad-justed to any level deemed appropriate. Becauseof the responsibility vested in the States, the con-gressional process might be amended to includeperiodic consultation with the States about themagnitude of needs and the most pressing prior-ities. FAA might play a role in this, acting eitheras a clearinghouse for State assessments of theirneeds or as an independent advisor on the condi-tion of the airport system nationwide and on thetotal capital investment required over any givenperiod.

Effects on Airport Financing

Although the total funding for airports wouldnot change from that available under present pol-

icy, the distribution of grants by class of airportwould probably be somewhat different. Table 57shows the breakdown that would occur if com-mercial service airports received half of annualTrust Fund outlays prorated by an enplanementformula and if the other half were distributed inequal parts to small commercial service, reliever,and GA airports. The distribution of the discre-tionary half could vary considerably from Stateto State. The equal three-way split shown in Table57 is an approximation of how States in the ag-gregate might choose to act, based on the waythat they have historically supported variousclasses of airports.

For commercial service airports, especially largeand medium airports, the principal effect of thispolicy would be an assured and essentially pre-dictable source of income that would be entirelyunder the control of the airport manager. Thetotal amount available to large and medium air-ports might be slightly less than it is under pres-ent policy since it would be strictly limited toenplanement allotments. (These airports receiveabout the same enplanement money today plusa share of discretionary FAA grants for noise pro-jects and other purposes.) Small commercial serv-ice airports, on the other hand, would probablyreceive more than they do under present policy.In addition to annual enplanement distributionsamounting to about $45 million, these airportsmight receive about one-third of State discre-tionary awards ($133 million). This total of $178

Table 57.–Federal Airport Aid (State Administration Policy)

Average annual expenditures (1985-89) (millions, 1982 dollars)

Number of Present State administration SelectiveAirport category airports policy a Enplanement b Block grantc aidd Defederalization d

Ch. 10—Policy Considerations ● 231

proval or in obtaining funds after grants are ap-proved. By distributing these FAA functions toState agencies, this policy could afford airportoperators more ready access to funding author-ities, quicker administrative action, and less de-lay in the delivery of funds after the decision hasbeen made.

Effects on Airport Users

For the users of airports now eligible for Fed-eral grants, there would probably be little or nochange under the State administration policy. Atlarge and medium commercial service airports,the funds available for capacity-related improve-ments would be about the same as under presentpolicy. Users of reliever and small GA airportscould find these facilities improved due to thegreater amount that might be awarded underState-agency administration. Overall, this policywould be unlikely to affect airport congestion anddelay, except insofar as increased funding for re-liever airports could hasten the expansion or up-grading of these facilities.

Effects on the Airport System

As postulated here, State administration wouldnot alter the amount of funding available for air-port development, but it would radically shift thepresent balance by allotting funds in roughly equalamounts among the five classes of airports. Thiswould be achieved by reducing slightly the sharefor large and medium airports (compared to thepresent AIP formula) and reallocating these fundsto the other three classes, along with that portionof Trust Fund outlays now reserved for FAAdiscretionary grants. In effect, this policy woulddevote half of annual Trust Fund outlays to air-ports serving airline passengers and the other halfto those serving general aviation (with some de-gree of overlap of these two functions at manycommercial service airports). Thus, this policyreflects the view that air transportation is of twokinds, with each entitled to more or less equalTrust Fund support. On one hand, there are com-mon carriers providing public air transportation.On the other, there are those who use the airspaceand airport system for private business and per-sonal purposes that may also provide public ben-efit. By providing aid in an evenhanded way, thispolicy affirms the importance of both to interstatecommerce and the public welfare.

Appendixes

Appendix A

ACRONYMS AND ABBREVIATIONS

————

—

———

—

————

————

Day-Night Average Sound LevelMicrowave Landing SystemDiscrete Address Secondary RadarSystem (with data link)National Airspace ReviewNational Airspace SystemNational Aeronautics and SpaceAdministrationNational Association of StateAviation OfficialsNational Airspace Command CenterNational Airport System PlanNoise Exposure ForecastNext Generation Weather Radarnautical mileNational Plan of Integrated AirportSystemsFAA Office of System EngineeringManagementPractical Annual CapacityProfessional Air Traffic ControllersOrganizationpassenger facility chargePlanning Grant ProgramPractical Hourly CapacityPerformance Measurement Systemrunway occupancy timeState Aviation System PlanStandard Air Carrier DelayReporting SystemStandard Metropolitan StatisticalAreaShort Takeoff and Landing (aircraft)Terminal Area ForecastTower Automated GroundSurveillance SystemTraffic Alert and CollisionAvoidance SystemTraffic Management SystemMilitary Radar Beacon DecoderUltra High Frequency (radio)Urban Mass TransportationAdministration(Wake) Vortex Advisory SystemVisual Flight RulesVery High Frequency (radio)Visual Meteorological Conditions

235

236 Airport System Development

Airport Designators

The Federal Aviation Administration and theOfficial Airline Guide employ a standard three-letterabbreviation to identify commercial service airports.The identifiers for large airports—those enplaning 1percent or more of airline passengers in 1982—arelisted below.

Atlanta, William B. HartsfieldInternationalBoston, Logan InternationalDallas, Love FieldWashington National AirportDenver, Stapleton InternationalDallas-Fort Worth RegionalDetroit, Metropolitan WayneCountyNewarkHonolulu InternationalHouston IntercontinentalNew York, John F. KennedyInternationalLas Vegas, McCarran InternationalLos Angeles InternationalNew York, La GuardiaOrlando InternationalMiami InternationalMinneapolis-St. PaulNew Orleans International, MoisantFieldChicago, O’Hare InternationalPhiladelphia InternationalPhoenix, Sky Harbor InternationalGreater Pittsburgh InternationalSeattle-Tacoma InternationalSan Francisco InternationalSt. Louis (Lambert) InternationalTampa International

Appendix B

SURVEY OF CURRENT AIRPORTFINANCIAL MANAGEMENT PRACTICES

The data on the financial policies and practices of passenger boardings), type of public operator, and fi-60 large and medium airports used in this study were nancial management approach (see ch, 6). It also un-gathered in a survey conducted by CBO in the sum- dicates whether or not the airport has a use agreementmer of 1983. These data are summarized in the fol- containing a majority-in-interest clause, the terms andlowing table, which lists the airports surveyed in rank expiration dates of current use agreements (if any), andorder of passenger boardings (enplanements) in calen- any recent, ongoing, or planned changes in financialdar year 1982. It gives each airport’s size (in terms of management or related developments.

Table B-1.—CBO Survey Data on Financial Management Practices at 60 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses)

Financial T e r m a n d

M a n a g e m e n t M a j o r i t y - i n - Expirat ion Date of Recent or Planned

Approach Interest Clause U s e A g r e e m e n t C h a n g e s

Residual cost, but

terminal concessionrevenues shared bycity and airlines

- - - - - - - - - - - - - - -

Residual cost

- - - - - - - - - - - - - - -

HARTSFIELD ATLANTA INTERNATIONAL (17,653,400), Run by city

Yes (all capital 30 years Basic landing fee will be renegot iated

projects involv ing (2010) in 1991increase in landingfee)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

CHICAGO-O’HARE INTERNATIONAL (17,428,127), Run by city

Yes 35 years Allocation of costs,(2018) majority-in-interest

clause revised in new agreement;clause protecting right to levypassenger facility charge included

- - - - - - - - - - - .- — - - - - - - - - - - - - - - - - - - - — - - - — — - - - - - - - - - - — -

LOS ANGELES INTERNATIONAL (15,758,082), Run by semi-autonomous department of the city

Residual cost No, but airlines must 30 yearsapprove debt financing (1992);exceeding $515 million 40 yearslimit in use agreements (United and

American)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Terminal leases of five years or lesswhere possible, except when airlinesmake extensive capital commitments(terminal modifications by Unitedand American Airlines); shorter-term, more compensatory agreementsanticipated after 1992

- - - - - - - - _ / - - _ - - - — — - - -

(Continued)

237

238 ● Airport System Development

Table B-1 .—CBO Survey Data on Financial Management Practices at 80 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Compensatory

Financial T e r m a n d

M a n a g e m e n t M a j o r i t y - i n - Expirat ion Date of Recent or Planned

A p p r o a c h Interest Clause U s e A g r e e m e n t C h a n g e s

NEW YORK--JOHN F. KENNEDY INTERNATIONAL (12 ,490,411) , Run by por t author i ty

N o n e 25 years JFK and LaGuardia are leased from(2004) New York City; city’s share of

these airports’ net revenues willrise from 60 to 75 percent in 1985

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - — - — - — — - - -

DALLAS-FORT WORTH REGIONAL (12,401,626), Run by both cities

Residual Cost N o n e 40 Vears None reported(2014)

- - — - - - - - - - - - - — - - - - - - — - — - - — - - - - - - - - - - - - - - - — - - — - - - - - - - - — - - - - — - - — - - -

DENVER-STAPLETON INTERNATIONAL (1 1,608,458), Run by city/county

C o m p e n s a t o r y None 28 years May move to annual adjustment(1992) of fees and rental rates next year

(currently adjusted biennially)

- - - - - - - - - - - - - - - - - — - - - - - — - - - - - - - - — - - - - - - - - - — - - - — - - - - - - - - — - - - - - — - — -

SAN FRANCISCO INTERNATIONAL (9,915,042), Run by city/county

Residual cost Yes, but can only defer 30 yearsfor six months (201 1)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

MIAMI INTERNATIONAL (9,256,017), Run by county

Residual cost, but Yes (except 25 years

some propert ies excluded $1 million Discretionary (1987)from revenue base Fund and projectsin calculating residual supported by revenuescost not counted in revenue base)_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Current revenue may not be used tofund capital development over $2million in any one year. Citymust exercise best efforts toissue revenue bonds to financecapital development

- - - - - - - - - - - - - - - - - - - -

Month-to-month leasing of terminalspace when leases expire or newspace added. Last year, movedfrom three-year to annual rentadjustments

- - - - - - - - - - - - - - - - - - - -

NEW YORK--LAGUARDIA (9,235,150), Run by port authority

Compensatory None

- - - - - - - - - - - . . - - - - - - - - - - - - - - - - _ - - - - -

Being negotiated(25-year leaseexpired in 1980)

- - - - - - - — - - -

Airport seeking shorter-term(ten-year) lease. LaGuardiaand JFK are leased from NewYork City; city’s share ofnet revenues will rise from60 percent to 75 percentin 1985

- - - - - - - - - - - - - - - - - - - -

(Continued)

Appendix B: Survey of Current Airport Financial Management Practices ● 239

Table B-1 .—CBO Survey Data on Financial Management Practices at 80 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Financial T e r m a n d

M a n a g e m e n t M a j o r i t y – i n - Expirat ion Date of Recent or Planned

Approach Interest Clause U s e A g r e e m e n t C h a n g e s

BOSTON LOGAN INTERNATIONAL (7,934,881), Run by port authority

Compensatory None No use agreements Short-term leases will be developedin an effort to maintain flexibilityin terminal space allocations

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -HONOLULU INTERNATIONAL (7,533,909), Run by state

Residual cost None 30 years Last year, created minimum landing(1992) fee for airlines and raised inter-

island carriers’ fee; interestfrom bond proceeds now to be usedfor capital development ratherthan credited to airlines

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

HOUSTON INTERCONTINENTAL (6,371,546), Run by city

Compensatory No 28 years Much future capital development(1997) planned

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

WASHINGTON NATIONAL (6,333,478), Run by federal government

Compensatory, but FBO No Ten years None reportedrevenues credited to (1984)landing area

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

IAMBERT-ST. LOUIS INTERNATIONAL (5,962,71 8), Run by city

Compensatory Yes 40 years(2005)

- - - _ _ _ - _ - - - - - - - - - - _ - _ _ - - - - - - - - — — — - - - - - - - - - - - -

Compensatory

NEWARK (N. J.) (5,817,050), Run by port authority

None 25 years(1998)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Terminal rentals will be adjustedannually as leases expire (currentlyadjusted every two years)

- - - - - — — - - — — - — - - - - — — -

Moving to shorter-term buildingleases, as possible. City’sshare of net revenues will risefrom 60 percent to 75 percentin 1986

- - - _ _ - - - - _ - - - _ - - - — - -

MINNEAPOLIS-ST. PAUL INTERNATIONAL (5,337,845), Run by airport authority

Residual cost (airfield); Yes, for airfield 27 years None reportedterminal, compensatory area only (1989)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(Continued)

Financial Term andManagement Majority-in- Expiration Date of Recent or PlannedApproach Interest Clause Use Agreement Changes

county

Majority-in-interest clause deleted innew agreement; clause addedprotecting airport’s right to levypassenger facility charge if lawpermits

- - - - - - - - - - - - - - - - - - - -

authority

Will offer month-to-month tenantsfive-year “rollover” leases (five yearswith three five-year renewal options)

- - - - - - - - - - - - - - - - - - - -

DETROIT METROPOLITAN WAYNE COUNTY (4,935,203), Run by county

Residual cost Yes (except for airport (2009) None reportedDiscretionary Fundprojects)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

LAS VEGAS--MCCARRAN INTERNATIONAL (4,655,484), Run by county

Compensatory None No use None reportedagreements(ordinance)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PHILADELPHIA INTERNATIONAL (4,403,541), Run by city

Residual cost Yes (can disapprove any 32 years None reportedproject with life of (2006)more than five years,costing over $100,000)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PHOENIX SKY HARBOR INTERNATIONAL (4,007,579), Run by city

Compensatory None No useagreements(ordinance)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Might move in future tosome form of lease/useagreement to protect airporl inpost-deregulatory environment

- - - - - - - - - - - - - - - - - - - -

(Continued)

Appendix B: Survey of Current Airport Financial Management Practices ● 241

Table B-1.—CBO Survey Data on Financial Management Practices at 80 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Financial Term andManagement Majority-in- Expiration Date of Recent or PlannedApproach Interest Clause Use Agreement Changes

TAMPA INTERNATIONAL (3,861,509), Run by airport authority

Residual cost Yes, but no clear direct 30 years None reportedveto power; excludes (1999)Discretionary Fund and allprojects in Master Plan

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

ORLANDO INTERNATIONAL (3,383,495), Run by airport authority

Residual cost Yes 28 years Developing 1400-acre industrial(2008) park to maximize revenues

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

NEW ORLEANS INTERNATIONAL (3,020,438), Run by city

Residual cost Yes (except small 20 years None reportedDiscretionary Fund) (1992)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

CHARLOTTE-DOUGLAS INTERNATIONAL (2,860,092), Run by city

Compensatory Yes, airfield only (projects 25 years Revenues have increased sincethat will increase (2004) Charlotte became Piedmont’sairline fees) major hub

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Compensatory

SAN DIEGO INTERNATIONAL (2,818,374), Run by port authority

None 15 years Term shortened for recent entrants(1994); month-to-month (new ?entrants)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

SALT IAKE CITY INTERNATIONAL (2,703,003),Run by city (in process of forming airport authority)

Compensatory Yes (approve capi ta l pro- 25 years Revenues have grown because ofjects over $50,000; one (2003) hub operations, but bond ratingsignatory airline suf - fell due to Western’s financialficient to approve) problems and cost allocation

dispute over terminal developmentproject (now resolved)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Residual cost

CLEVELAND HOPKINS INTERNATIONAL (2,656,252), Run by city

Yes (except Dis- 30 years None reportedcretionary Fund); can dis- (2005)approve projects over $250,000(1976 dollars), but city canoverride airlines afterprojects have been dis-approved twice

- - - - - _ - - - - _ - - _ - - _ - - - - - - - - - _ - - — _ _ - - - - _ - _ - . . - _ - - _ - - _ - - _ _ - - - - _ - - - - - - —

(Continued)

—

242 ● Airport System Development

Table B-1.—CBO Survey Data on Financial Management Practices at 60 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Financial Term andManagement Majority-in- Expiration Date of Recent or PlannedApproach Interest Clause Use Agreement Changes

Compensatory

- - - - - - - - - - - - - - -

Residual cost

- - - - - - - - - - - - - - -

Compensatory (modified;space rentals set toolow to recover costs)

- - - - - - - - - - - - - - -

Residual cost

- - - - - - - - - - - - - - -

Compensatory

- - - - - - - - - - - - - - -

Residual cost

- - - - - - - - - - - - - - - -

KANSAS CITY INTERNATIONAL (2,623,808), Run by city

Yes, for airfield capital 28 years None reportedprojects (except Dis- (1998)cretionary Fund)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

MEMPHIS INTERNATIONAL (2,290,930), Run by airport authority

Yes, all projects over 30 or more years Growth of Federal Express has helped$5,000 (except Discretionary (1999) offset loss in commercial airFund) carrier landed weights; landing

fees and rentals reduced recently

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

BALTIMORE-WASHINGTON INTERNATIONAL (2,269,164), Run by state

Yes (projects over $25,000) 15 years (1993) None reportedplus ten-yearrenewal (2003)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PORTLAND (ORE.) INTERNATIONAL (1,928,054), Run by port authority

Yes (exceptDiscretionary Fund)

- - - - - - - - - - -

SAN ANTONlO

None

- - - - - - - - - - -

20 years None repofied(1991)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

INTERNATIONAL (1,776,650), Run by city

Eight years(1984)

- - - - - - - - - - - - - - - - - - -

I(AHULUI (MAUI) (1,670,782), Run by state

None

- - - - - - - - - - - - - - - - - -

GREATER CINCINNATI INTERNATIONAL

Residual cost

- - - - - - - - - - - - - - -

Yes (all projects over$50,000, exceptDiscretionary Fund)

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

30 years(1992)

- - - - - - - - - - - -

New agreement being negotiatedprobably will be very similarto existing one

- - - - - - - - - - - - - -

None reported

- - - - - - - - - - - - - -

(1,663,686), Run by airport authority

- - - - - -

- - - - - -

30 years(2002)

- - - - - - - - - - - -

Concession revenues haveincreased since Cincinnatibecame a hub for Delta

- - - - - - - - - - - - - - - - - - - -

(Continued)

Appendix B: Survey of Current Airport Financial Management Practices ● 243

Table B-1.—CBO Survey Data on Financial Management Practices at 60 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Financial Term andManagement Majority-in- Expiration Date of Recent or PlannedApproach Interest Clause Use Agreement Changes

MILWAUKEE--GENERAL MITCHELL FIELD (1,61 1,100), Run by county

Residual cost Yes, but can only defer 25 years Went to long-term residualprojects for 2 years (2010) cost agreement to finance new(projects over $100,000, terminal, to be completedor several adding in 1985up to $200,000)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PALM BEACH INTERNATIONAL (1,607,760), Run by county

Residual cost N o n e 17 years Airport seeks compensatory(1984) approach, much shorter term

for new agreement. Majorimprovements to begin in 1985

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

SAN JOSE MUNICIPAL (1,520,519), Run by city

Residual cost None 30 years (2009); Moving to shorter-term agreementsthree to five years for recent entrants and adjusting(new entrants) terminal rental rates upwards,

as possible

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I INDIANAPOLIS INTERNATIONAL (1,383,01 1), Run by airport authority

Compensatory None One to five years Ratemaking subject to challenge in(ordinance); some litigation pending in U.S. Circuitcarriers operating Court of Appeals, Seventh Circuitwithout agreement

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PORT COLUMBUS INTERNATIONAL (1,315,612), Run by city

Residual cost (airfield); Yes, airfield 25 years None reportedterminal--concession only (projects (2000)revenues go to airport over $25,000)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

OKLAHOMA CITY--WILL ROGERS WORLD (1,302,459), Run by city

Compensatory (modified; None 30 years (1997); Rates negotiated by supplementalairlines do not contri - one to five years agreements every five years. Newbute to most capital (new entrants) entrants are offered one-yeardevelopment) agreements until expiration of

five-year cycle

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(Continued)

25-420 0 - 84 - 17

244 . Airport System Development

Table Bo1.—CBO Survey Data on Financial Management Practices at 80 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Financial Term andManagement Majority-in- Expiration Date of Recent or PlannedApproach Interest Clause Use Agreement Changes

RENO CANNON INTERNATIONAL (1,281,393), Run by airport authority

Residual cost Yes, but airport 17 years Short-term lease and use agreementcan override after (1996) now availabletwo deferrals

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

TULSA INTERNATIONAL (1,274,199), Run by airport authority

Residual cost Yes (projects over 30 years None reported$400,000; except (2008)Discretionary Fund)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

ALBUQUERQUE INTERNATIONAL (1,269,279), Run by city

Compensatory None Renegotiating; New agreement will resemblelast agreement previous onetwo to fiveyears (1981)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

WINDSOR LOCKS (CT.) --BRADLEY INTERNATIONAL (1,232,669), Run by state

Compensatory Yes (airfield projects 30 years None reportedover $250,000, terminal (201 1)projects over $75,000)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

SACRAMENTO METROPOLITAN (1,227,096), Run by county

Residual cost Yes, but can only defer Five years Term, rate-setting practices,projects for two years (1986) and majority-in-interest clause(projects over $100,000; altered in new agreementexcept Discretionary Fund)

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - - - - - - - - - - - - - - - - - - -

Washington, D. C.--DULLES INTERNATIONAL (1,207,343), Run by federal government

Compensatory (but FBO None 10 years None reportedrevenues credited ( 1984)to landing area)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(Continued)

Appendix B: Survey of Current Airport Financial Management Practices . 245

Table B.1.-CBO Survey Data on Financial Management Practices at 80 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Financial T e r m a n d

M a n a g e m e n t M a j o r i t y - i n - Expirat ion Date of Recent or Planned

Approach Interest Clause U s e A g r e e m e n t C h a n g e s

Residual cost

- — - — ----- —-----

Residual cost

- _ - - _ — - - - — — - — -

C o m p e n s a t o r y

- — - - — - — - — - — -

Compensatory (modified)

- - - - - - - - - - - - - - -

Residual cost

- - - - - - - - - - - - - - -

Residual cost

- - - - - - - - - - - - - -

Residual cost

- - - - - - - - - - - - - -

NORFOLK INTERNATIONAL (1,1 96,286), Run by port authority

Yes, can request cost 25 yearsjustification, and (1999)arbitration if not satis-fied, for any item incapital budget

- - - - - - - - - - - - - - - - - - - - - - - - -

NASHVILLE METROPOLITAN (1,1 53,019), Run by

Yes (projects over $20,000) 30 years(2005)

— - — - — — - — - - — - - - — - - — - — - - — - -

AUSTIN--MUELLER MUNICIPAL

Not formal, but implied inlease for projects f o rwhich airline ratesamortize airport costs

- - - - - — - - — - - - - — - — - - — -

(1,1 15,992)

Five years(1988)

- - - - - -

None

- - - - - - - - -

reported

. - - - — - - - - - - - - - - - -

airport authority

None reported

_ - _ - - - — _ _ - - _ - — — _ - — — - _ — - -

Run by City

Term shortened and ratemakingapproach changed in newagreement (effective1 March 1983)

- - - - - - - - - — - — — - - - - - — - - — — - -

JACKSONVILLE INTERNATIONAL (1,008,891), Run by port authority

None 20 years None reported(1990)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

LIHUE (KAUAI) (995,512), Run by state

None 30 years None reported(1992)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

EL PASO INTERNATIONAL (994,102), Run by city

None Renegotiating;last agreement20 years (1982)

- - - - - - - - - - - - - - - - - - - - - - - - - - - -

ONTARIO (CAL) INTERNATIONAL (989,024),

None reported

- - - - - - - - - - - - - - - - - - - - - -

Run by semi-autonomous department of the city of Los Angeles

None Five years Landing fees same as Los Angeles(1985) International; only Southern California

airport with capacity to expand

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(Continued)

.

246 ● Airport System Development

Table B-1 .—CBO Survey Data on Financial Management Practices at 60 Large and Medium Commercial Airports,1983 (Numbers of enplanements in 1982 in parentheses) (continued)

Financial Term andManagement Majority-in- Expiration Date of Recent or PlannedApproach Interest Clause Use Agreement Changes

RALEIGH-DURHAM (941,005), Run by airport authority

Compensatory None No use agreements None reported

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

LOUISVILLE--STANDIFORD FIELD (922,009), Run by airport

By negotiation None Renegotiating;(noncompensatory, last agreementbut not residual cost) 30 or more years

(1983)- - - - - - - - - - . - - - - - — - - - - - - - - - - - - - . - - - - - — - - - - - - - -

authority

Airport seeks shorter term, fullycompensatory terminal, residualcost airfield in new agreement

- - _ _ _ _ - - - - - — — - - - - - - -

TUCSON INTERNATIONAL (900,547), Run by airport authority

Residual cost Yes, projects over $35,000 30 years $60 million terminal expansion(except Special Reserve Fund) (2006) project under way, to be completedand next year’s budget in April 1985

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

OMAHA--EPPLEY AIRFIELD (848,257), Run by airport authority

Compensatory No Year-to-year Major terminal expansion project(1984) will begin in 1984

- - — — - - - - — — — — — - - - - -- - - - — - — — - - - — — - - - - - - - - - - - - — - - - - - - - - - - -

COX DAYTON INTERNATIONAL (806,464), Run by city

Yes, projects over $10,000 23 years (1996) Traffic has increased significantly(except Discretionary Fund) since Dayton became hub for Pied–

mont. Terminal apron overlay pro-ject to begin in 1984; possibleterminal expansion in 1985

Residual cost

SOURCE: Congressional Budget Office

Appendix C

IMPACT OF MANAGEMENT APPROACHAND AIRPORT SIZE ON AIRPORT

FINANCIAL PERFORMANCE

The analysis in chapters 6 and 7 divides airports intothe three size categories (large, medium, and small)based on passager enplanements. Such divisions,though useful, are necessarily arbitrary, and shouldbe understood to carry the caution that slight changesin definition can shift conclusions regarding the effectof airport size on financial performance. A similar cau-tion should be applied in assessing the relative shiftsin financial performance between large and small air-ports following Federal deregulation of the airlines, atwhich time major air carriers curtailed service to somesmall airports in favor of the larger facilities servingmore profitable routes.

To overcome the problems created by arbitrary dis-tinctions in airport size, the Congressional Budget Of-fice has related airport financial data to airport sizeas a continuous variable. The statistical results are

reported in table C-1 and interpreted numerically intable C-2. As shown in table C-2, the approach to fi-nancial management and the volume of traffic servedby the airport bear significantly on financial per-formance.

Effect of Management Approach

Airports that use the compensatory approach havenet take-down ratios better, on average, by 24 per-cent than residual-cost airports, and debt service safetymargins more than twice as good. There are two pos-sible interpretations of this result, however. One is thatthe added earning power possible with the compensa-tory approach improves an airport’s financial perform-ance. A second is that only those airports in the strong-est travel markets turn to the compensatory approach

Table C-1 .—Ordinary Least Squares Regression Estimates for Airport Financial Performance,Pooled Cross-Sections, 1975-82

Log Log LogLog Net take-down Debt-to-asset Debt-service

Operating ratio ratio ratio safety margin

Constant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial management approach(1 = compensatory. . . . . . . . . . . . . . . . . . . . . . . .

Log of Enplanements:1975 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1976 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1977 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1978 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1979 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1980 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1981 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1982 ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

R’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F value . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . .

5.894(29.22)

–0.101(- 1.873)

–0.238(-9.081)–0.229

(-9.099)–0.231

(-9.280)–0.230

(-9.036)–0.235

(–9.493)–0.237

(-9.456)–0.241

(–9.791)–0.261

(–9.933)0.588

12.760

1.883(8.770)

0.218(3.873)

1.647(3.192)

–0.145(– 1.096)

1.334(3.223)

0.791(7.575)

0.184(3.300)0.124

(2.400)0.167

(3.277)0.179

(3.472)0.206(4.092)0.217

(4.271)0.207

(4.126)0.173

(3.402)0.569

12.320NOTE: “t-ratios” are given in parentheses. Logs are natural logs.

SOURCE: Congressional Budget Office.

247

— .

248 ● Airport System Development

in the first place. Both explanations may apply to someextent.

Debt-to-asset ratio appears not to be affected bymanagement approach—i.e., no statistically significantrelationship is apparent. This is not surprising, as man-agement approach itself need not influence the actuallevel of investment. There is also no statistically sig-nificant relationship between management approachand operating ratio.

Effect of Airport Size

Airport size has a measurable influence on finan-cial performance. As shown in table C-2, the elasticityof airport size with respect to an airport’s operatingratio lies at about –0.24. This means that each 10-percent increase in the volume of traffic improves theairport’s operating ratio by 2.4 percent. Conversely,each lo-percent fall in traffic volume causes an esti-mated 2.4 percent deterioration in operating ratio.Similar relationships emerge for the other financial in-dicators shown in table C-2.

Table C-2.—Estimated Impact of Approach to Financial Management and Airport Size onAirport Financial Performance (95 percent confidence Intervals In parentheses)

FACTORS AFFECTING AlAppendix D

RPORTCOSTS OF CAPITAL

The statistical (regression) analysis summarized intable D-1 attempts to quantify the effects of four fac-tors on interest costs paid by the issuers of airportbonds: general market conditions, type of securityused to back airport bonds, numbers of years in whichbonds mature, and airport size (in terms of numbersof passenger enplanements).

The results indicate that interest costs and marketconditions are proportional; a l-percent change inmarket interest costs yields roughly a l-percent changein airport interest costs. Issuers of general obligationbonds, on average, obtain 8 percent lower interest

Table D-1 .—Ordinary Least Squares RegressionEstimates, Pooled Cross.Section: 1978-82

Log interest cost

Constant. . . . . . . . . . . . . . . . . . . . . . . . . . .

Log of Bond Buyer’s 20 BondMarket Index . . . . . . . . . . . . . . . . . . . . .

Bond security(general obligation = 1). . . . . . . . . . . .

Log of average maturity. . . . . . . . . . . . . .

Log of enplanements:1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1979 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1980 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

R’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F value . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–0.174(–1.105)

0.992(14.355)

–0.088(–4.520)

0.111(6.739)

–0.0146(-2.844)–0.0117

(–2.208)–0.0123

(–2.421)–0.0113

(–1.988)–0.0156

(–2.783)0.896

125.576NOTE: “t-ratios” are given in parentheses. Logs are natural logs.

SOURCE: Congressional Budget Office.

costs than issuers of revenue bonds (see table D-2). Fur-ther, the regression provides statistical confirmationof the typical bond yield curve, with longer-term issuesrequiring higher interest rates. As the average maturityof the bond increases, so does the average interest paid,with a lo-percent increase in maturity resulting, onaverage, in a 1.1-percent increase in the interest rateover this period. The analysis also shows that, afteradjustments are made for these other factors, the largerthe airport, the lower the interest rate, On average,10 percent more enplanements results in a 1- toI. S-percent decrease in interest.

Table D.2.—Estimated Impact of Market InterestRates, Type of Security, Average Maturity, andAirport Size on Airport Cost of Capital, 1978-82

(95 percent confidence intervals in parentheses)

Interest cost

Elasticity with respect to market in-terest rates. . . . . . . . . . . . . . . . . . . . . . .

Percentage difference in interest costsof general obligation versus revenuebonds . . . . . . . . . . . . . . . . . . . . . . . . . . .

Elasticity with respect to averagematurity of issues . . . . . . . . . . . . . . . . .

Elasticity with respect to number ofenplaned passengers:1978, ., . . . . . . . . . . . . . . . . . . . . . . . . . .

1979 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1980 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.99(*0.14)

–8.4(+3.8)

0.1115(*0.0324)

(* O.O11O)SOURCE: Table D-1.

249

Appendix E

AIRPORTS IN THE MUNICIPAL BONDMARKET: A REGIONAL ANALYSIS

This appendix summarizes the participation of air- ●

ports in the municipal bond market by FAA regionover the 1978-82 period (see table E-1) and chartsregional differences in interest rates paid on airport ●

bonds relative to other municipal bonds (table E-2).The FAA breaks down regions as follows:

New England Region: Connecticut, Maine,Massachusetts, New Hampshire, Rhode Island,Vermont.Eastern Region: Delaware, District of Columbia,Maryland, New Jersey, New York, Pennsylvania,Virginia, West Virginia.

Table E.l.— Bond Issues for Airports by Region, 1978-82

In millions of 1982 dollars Percent of total

Number Average size Value Number ValueRegion of issues of issue of issues of issues of issues

New England:General obligation . . . . . . . . 3 0.4 1.1 1.3 a

Revenue . . . . . . . . . . . . . . . . . 1 100.2 100.2 0.4 2.0

Subtotal . . . . . . . . . . . . . . . 4 25.3 101.2 1.7 2.0Eastern:

General obligation . . . . . . . . 7 8.2 57.3 2.9 1.1Revenue . . . . . . . . . . . . . . . . . 21 14.9 312.4 8.8 6.2

Subtotal . . . . . . . . . . . . . . . 28 13.2 369.7 11.8 7.3Southern:

General obligation . . . . . . . . 9 9.2 82.4 3.8 1.6Revenue . . . . . . . . . . . . . . . . . 34 44.0 1,496.8 14.3 29.7

Subtotal . . . . . . . . . . . . . . . 43 36.7 1,579.2 18.1 31.3Great Lakes:

General obligation . . . . . . . . 43 4.3 185,1 18.1 , 3.7Revenue . . . . . . . . . . . . . . . . . 17 10.3 174.6 7.1 3.5

Subtotal . . . . . . . . . . . . . . . 60 6.0 359.6 25.2 7.1Central:

General obligation . . . . . . . . 13 1.9 25.2 5.5 0.5Revenue . . . . . . . . . . . . . . . . . 8 12.9 103.4 3.4 2.0

Subtotal . . . . . . . . . . . . . . . 21 6.1 128.6 8.8 2,5Northwest Mountain:

General obligation . . . . . . . . 4 2.3 9.2 1.7 0.2Revenue . . . . . . . . . . . . . . . . . 15 21.1 315.8 6.3 6.3

Subtotal . . . . . . . . . . . . . . . 19 17.1 325.0 8.0 6.4Western Pacific:

General obligation . . . . . . . . 5 5.5 27.3 2.1 0.5Revenue . . . . . . . . . . . . . . . . . 20 52.7 1,053.6 8.4 20.9

Subtotal . . . . . . . . . . . . . . . 25 43.2 1,080.9 10.5 21.4Southwest:

General obligation . . . . . . . . 7 3.2 22.5 2.9 0.4Revenue . . . . . . . . . . . . . . . . . 30 35.9 1,077.1 12.6 21.3

Subtotal . . . . . . . . . . . . . . . 37 29.7 1,099.6 15.5 21.8Alaska b:

General obligation . . . . . . . . 1 3.0 3.0 0.4 0.1All regions:

General obligation . . . . . . . . 92 4.5 413.0 38.7 8.2Revenue . . . . . . . . . . . . . . . . . 146 31.7 4,633.8 61.3 91.8

Total . . . . . . . . . . . . . . . . . . 238 21.2 5,046.8 100.0 100.0

250

Appendix E: Airports in the Municipal Bond Market: A Regional Analysis 251

Table E-2.—Differences in Interest Rates Paid on Airport Bonds Relative toOther Municipal Bonds by Region, 1978-82 (in basis points)

Region 1978 1979 1980 1981 1982 1978-82

New England:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Eastern:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Southern:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Great Lakes:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Central:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Northwest Mountain:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Western Pacific:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Southwest:General obligation . . . . . . . .

Alaska:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

Total:General obligation . . . . . . . .Revenue . . . . . . . . . . . . . . . . .

–58NIA

a

a– 122

aa

a

a

22–79

22

a

– 4 7–18–36

–26– 137

a

N/A– 4a

– 5 7–469

–51– 101

– 9 5– 156

a

– 7 7a

8–70–63

–71NIA

– 7 5NIA

– 3 6a

– 4 3–223

– 7 5– 7 4

– 5 4– 142

– 5 9– 154

a

a– 9 4

22–88N/A

– 3 2a

– 15322

–81a

a

– 102

a

a–237

– 3 7–119–53

– 102NIA

– 6 9N/A

93NIA

a

64– 109

17–115

– 8– 138–15

– 3 55

–49a –70 – 4 6 a – 8

a

NIA

a

a

aa

a

a– 4 2

a– 4 2

b

–63NIA

–46–29

–73– 103

–89– 123

–66–32

–65–70

NOTES: Data reflect difference in interest rates between airport bonds and other general obligation and revenue bond issues, in basis points. General obligation issuesare compared with the average value of the Bond Buyer’s Index of 20 municipal bonds during the month of issue. Revenue bonds are compared with the BondBuyer’s Revenue Bond Index during the month of June. Revenue bond figures for 1979 based on September-December only. N/A = data not available

aNo issues with this security in this Year.bNo issues with this security in this region.

SOURCE: Congressional Budget Office.

Southern Region: Alabama, Florida, Georgia, ●

Kentucky, Mississippi, North Carolina, PuertoRico, South Carolina, Tennessee, Virgin Islands ●

Great Lakes Region: Illinois, Indiana, Michigan,Minnesota, North Dakota, Ohio, South Dakota, ●

Wisconsin.Central Region: Iowa, Kansas, Missouri, ●

Nebraska.

●

●

●

Index

Index

air traffic control (ATC) 66, 68, 69, 70, 75, 84, 114, 210Air Traffic Control Radar Beacon System (ATCRBSl

66, 67, 70air traffic hubs, 5Alaska, 22, 29, 31Allegheny Airlines, 172Atlanta, GA, 34Automated Radar Terminal System (ARTS) 67Automated Weather Observing System (AWOS), 79

aviation forecasting system, 163National Airport System Plan (NASP), 3, 11, 18, 29,

34, 69, 189, 196, 197, 198, 199, 222Office of Systems Engineering Management (OSEM),

50Federal Highway Administration (FHWA), 94Federal Inspection Service (FIS), 93Federal policy and strategy, 12financial management and pricing, 125-136

255

. .

256 ● Airport System Development

compensatory approach, 125, 127landing fees, 132operating revenues, 133pricing of airport facilities and services, 129residual-cost approach, 125, 127structure and control of charges, 131trends in management since deregulation, 135

fixed based operator (FBO), 26, 27Florida, 149forecasting and trends, 159-185

aviation demand forecasting, 159-168FAA forecasting system, 163-166limitations of aviation demand models, 166methods, 159

implications for airport development, 184-185recent trends in airline industry, 169-184

changes in airline industry composition, 170changes in route networks, 172formation of new hubs, 174

Frontier, 170funding, 139-156

Federal airport development aid, 139-142demand for investments, 141investment trends, 139

financial conditions of U.S. airports, 143-147airline deregulation, effects of, 146effects of airport characteristics, 144measures of performance, 143recent trends, 143

municipal bond market, 147-156market for airport bonds, 151role in airport development, 147

gross takeoff weight (GTW), 75

Hawaii, 22, 29Houston, TX, 34

Illinois, 29, 31impact of management approach and airport size on air-

port financial performance, 247-248Industry Task Force on Airport Capacity Improvement

and Delay Reduction, 11, 64, 84, 94, 100Instrument Flight Rules, 51, 70.72Instrument Landing System (ILS), 62, 64, 65, 66Instrument Meteorological Conditions (IMC), 62, 64, 66,

71, 75International Civil Aviation Organization, 66

Joint Airport Weather Studies, 78

legislation:Air Cargo Deregulation Act of 1976, 211Air Commerce Act of 1926, 209Airmail Act of 1925, 209Airline Deregulation Act of 1978, 23, 169Airport and Airway Development Act, 13, 194, 196,

211, 213Airport and Airway Improvement Act of 1982, 4, 7,

12, 15, 18, 189, 203, 212

Airport and Airway Revenue Act, 139Civil Aviation Act, 209Federal Airport Act of 1946, 209, 210Federal Aviation Act of 1958, 35, 210

Low Level Wind Shear Alert System (LLWSAS), 79

management issues, 15Maryland, 22, 29, 110McKinnon, Dan, Chairman CAB, 24Microwave Landing System (MLS), 62, 65, 66, 72, 82,

Moody’s

National

National

NationalNational

NationalNational

National

83Investors Service, 148

Aeronautics and Space Administration(NASA), 70, 77, 78

Airspace Command Center (NASCOM), 50,51, 52, 55

Airspace Review, 11, 71Association of State Aviation Officials

(NASAO), 193, 194Oceanic and Atmospheric Administration, 78Plan of Integrated Airport Systems (NPIAS), 4,

12, 18, 203Science Foundation, 78

New York, 29, 31, 34, 40, 118NEXRAD, 79Noise Exposure Forecast (NEF), 36

Office of Management and Budget, 31, 191organizations and institutions, 21-41

aircraft noise, 34Federal responsibilities, 35local noise abatement programs, 36measurement of noise, 35noise and land use, 36

capital improvement, 32ownership and operation, 21

airport-air carrier relations, 23airport-concessionaire relations, 25airport-general aviation relations, 26

planning and development, 27airport users, 27Federal Government, 28regional planning agencies, 31State aviation agencies, 29

Performance Measurement System (PMS), 50Piedmont, 115policy considerations, 209-231

Federal airport policy, assessment of, 212-231defederalization, 219funding under current policy, 218no Federal aid, 226selective Federal aid, 222State administration, 229

history, 209-211Port Authority of New York and New Jersey, 94,

118, 119, 162, 193Practical Annual Capacity (PANCAP), 46, 52, 53Practical Hourly Capacity (PHOCAP), 46

113,

Index ● 2 5 7

0

Professional Air Traffic Controllers Organization (PATCO), 169

reducing delay, other approaches, 109-122 administrative options, 109-115

balanced use of large airports, 112 diversion of traffic, 109 quotas, 114 rehubbing, 115 restriction of access by aircraft type, 113

demand-management alternatives, 120-122 economic options, 116-120

differential airport pricing, 116 slot auctions, 119

Republic, 170

Short Takeoff and Landing (STOL) aircraft, 81 Standard Air Carrier Delay Reporting System (SDRS),

50,52 standard metropolitan statistical area (SMSA), 4 State and national airport system plans, comparison of,

200 State Aviation System Plans (SASP), 194, 195, 196 State funding of airport and aviation programs, 30

technology, 59-106 ~irnnr. ~nrl ~ircn~r~ f..C\_f..? '-&&&Y"'& '" .... &1 _ _ a ... <JY_'-'-, -- __

airport and components, 60, 61 airport surface utilization, 83-93

apron and gate facilities, 86 surveillance and control, 83 taxiways, 84 terminal building design, 88 terminal facilities and services, 86 terminal services, 90

airspace use procedures, 71-76 converging runways, 71

dependent parallel runways, 72 independent parallel runways, 73, 74 reduced longitudinal separation on final approach,

74 separate short runways for small aircraft, 76 triple parallel runways, 73

applications of technology, 97-106 capacity and delay problems, 100

airport capacity matrix, 102-106 guidance surveillance and control, 62-71

Microwave Landing System, 62 supporting technologies, 70 surveillance radar, 66 traffic management techniques, 68

landside access, 93-97 airport ground access, 96

foreign airports, 96 terminal curb front, 95

noise control and abatement, 79-83 airframe noise, 81 engine noise, 80

weather and atmospheric effects, 76-79 wake vortex, 77 wind shear, 77

Tower Automated Ground Surveillance System (TAGS), 84

Traffic Alert and Collision Avoidance System (TCAS)' 70

Traffic Management System (TMS), 68, 69 TWA, 161

Urban Mass Transportation Administration (UMTA), 94 USAir, 170

Visual Flight Rules, 51, 70 Visual Meteorological Conditions (VMC), 62, 64, 71, 75 Vortex Advisory System (VAS), 77